When a company needs to raise money, it looks to the capital-markets divisions of investment banks.

Members of a capital-markets group originate, structure and syndicate stock and bond offerings, a business that has been at the center of the financial crisis. Since last summer, there has been only one initial public offering, and business in the debt markets remains slow after a complete freeze in the third quarter of 2008. Revenue from U.S. equity capital markets is down more than 70% this year from 2007, according to Dealogic. Meanwhile, revenue from debt capital markets is down 50% during the same time period. Add to that the wave of consolidation within the financial-services industry this year, and banks from Bank of America Corp. to Wells Fargo & Co. have been slashing their capital-markets staff just to keep their costs down.

Investment banks are creatures of habit, however, and the Wall Street business model of the future is likely to look a lot like the Wall Street business model of the past. Unlike the proprietary trading business, which likely will never return to its pre-crisis levels, the capital markets business should bounce back. Companies will always need to raise capital. That means that as the economy recovers and credit markets thaw, so should business for capital-markets groups.

WHERE THE ACTION IS

The current economic crisis has put the business model of the financial industry in flux, and most firms have not crystallized on a plan for the future. That means that it will be difficult to determine what areas within the capital markets are going to be hot in the long term.

In the short term, however, firms are returning to safety and stability. That means that groups focused on the safest products -- government, municipal, and corporate investment and non-investment grade bonds -- will perform the best in the near term. Demand for complicated and highly structured products should remain slow in the near term.

That said, the downturn in the capital-markets business combined with the consolidation within the banking industry has meant layoffs. Bank of America, Wells Fargo, Citigroup Inc. and JP Morgan Chase & Co. have all cut staff.

Those looking for a job in capital markets should think small or, at least, smaller. Working at a bulge-bracket firm has long been a career goal for many, but that is no longer the case. Most of the nation's largest banks and financial institutions have accepted government money and that means restrictions on compensation and the way business is done. Bankers now are increasingly turning their eyes toward smaller firms that have not taken government funds. "We have the ability to say, 'If you bring in revenue, you'll get paid.' In this climate, that's pretty appealing," said a managing director at a non-bulge bracket Wall Street firm. And some smaller firms such as Cantor Fitzgerald and Jefferies Group Inc. have been expanding their business in the hopes of taking advantage of their larger rivals' troubles.

With all that said, layoffs in the industry -- combined with the fact that some established profesionals are looking to move away from troubled firms -- mean there will be more competition for fewer positions.

CAREER PATH

There are many kinds of jobs available in capital markets. The two major functions are sales & trading and origination. Those in sales & trading often form relationships with institutions and buy and sell stocks and bonds for them, acting either as traders or institutional salespeople. Origination professionals more often work directly with the firm's investment bankers to price stock and bond offerings and lead "road shows" to sell securities to mutual funds, pension funds, high net-worth individuals and others. Origination experts also work with the equity and bond sales forces to drum up interest for buyers and allocate portions of the offering.

Those looking to jump into the capital markets should first look at their educational credentials. Firms are looking for job candidates with a background in accounting, finance, economics or mathematics.

Some certifications are key -- anyone working on a trading floor, for instance, will need Series 7 or Series 63 credentials, which are usually earned with the sponsorship of a Wall Street firm. Trading floors are more likely to be filled with holders of MBAs and PhDs than they were in previous years. Most people start on a trading floor as trainees, a job that involves picking up phones, learning to yell across crowded trading floors, and picking up the rudiments of the business.

Investment banks are not the only place to get jobs in the capital markets. Hedge funds and mutual funds always have their own capital markets teams. Their jobs, however, are to bring a certain skepticism to the prices suggested by the banks and drive a hard bargain.

GETTING THE JOB

Capital markets jobs, particularly in trading, increasingly require an extensive mathematical background. A mathematics or engineering degree, particularly a PhD from a school like MIT or Caltech, is a huge plus; many banks and hedge funds are happy to hire professionals with a math or science background who has no trading experience. Given that much of trading is increasingly technical, developers are also in demand. For jobs in origination, applicants need essentially the same skills as investment bankers, not traders: a certain facility with clients and a persuasive personality, as well as familiarity with financial models.

As with many Wall Street jobs, networking is important to be in the loop. Recruiters comb college and engineering-school campuses, but, as with most of Wall Street, the best jobs are not advertised and it helps to keep up with events and connections through trade associations such as the LSTA or SIFMA. Another way for mid-career professionals to find a job is to connect with a good headhunter or executive recruiter in the know.

Those in business school should try to get summer internships on a trading floor to see if capital markets is a good fit. The hours are often far better than in investment banking, because the U.S. markets close at 4:00 p.m. However, trading is known to be the most rough-and-tumble division of a securities firm, and politesse is often forsaken in favor of short, direct orders, often barked out.