More than half of all registered independent advisory (RIA) firms bought or considered buying another advisory firm at least once in the past two years, reports Real Deals 2008, a new study by Pershing Advisor Solutions. But according to the study—which measured mergers and acquisitions in the independent advisory industry—it's a seller's market. More than one-quarter of RIA firms sold or considered selling their firms in the past two years.

Before 2006, most buyers made single, opportunistic acquisitions. But in the past two years, many acquiring firms became what the study defines as serial buyers: those interested in growing their profitability and financial returns, rather than creating synergistic value. These buyers are typically hands off with management and operations of the firms they acquire and accounted for one-third of transactions in 2006 and 2007.

The study sorts today's buyers into three categories: Purely Financial, those who purchase revenues and returns, usually don't hold actual equity shares of the firms they acquire and have a very hands-off approach; Financially Motivated, who desire financial gain, but add value to their acquired firms in some way; and Synergistic, who invest for strategic reasons, adding value to firms with a hands-on approach.

Recent Purely Financial buyers include Fiduciary Network, which acquired Regent Atlantic Capital and Evensky & Katz Wealth Management in February 2007. Financially Motivated buyers include Focus Financial Partners, which bought GW & Wade in September 2007. Synergistic buyers include firms such as Fisher Investments and various banks, RIA firms and trusts. The merger of Kochis Fitz and Quintile Wealth Management in November of 2007 was a synergistic transaction.

The majority of firms sell for liquidity issues, the study reports, while 25% sell for the potential growth and synergy. The majority of acquired firms bring in at least $5 million in annual revenue.

From 2000 to 2005, the average annual number of deals between investment advisory firms was 35. In 2007, 58 such deals were made. Deal making has slowed in 2008, due to fewer acquisitions by firms in the troubled financial sector.