Wall Street's standout business is cooling off ? fast

The Pfizer-Allergan merger, a deal that would have been worth $160 billion, was officially scrapped on Wednesday after the US Treasury announced new rules clamping down on so-called tax inversions.

The proposed merger of Halliburton and Baker Hughes is also at risk. The US Department of Justice has filed an antitrust lawsuit to block that merger.

The two transactions highlight just how risky the M&A business ? which was a standout performer in 2015 ? has become.

Market volatility through the first quarter led to a 20% decline in takeover activity versus the same period a year earlier, and now regulators are flexing their muscles to hinder transactions that have already been announced that involve reducing taxes or competition.

The unwinding is hitting stock prices too - and not just of the companies that were about to be acquired. Shares of small, M&A-focused investment banks have been whalloped this week.

Goldman Sachs recently hosted a conference call with Steve Kotran, partner and head of the financial advisory practice at law firm Sullivan & Cromwell, and discussed some of the emerging risks to the M&A business.