The pace of mergers and acquisitions among registered investment advisors in 2008 is down from the torrid pace of the past two years, says a study released Friday by Pershing Advisor Solutions LLC and Moss Adams LLP.

   Although the long-term trend remains strong, the current malaise in the overall financial world has crimped advisory M&A deals so far this year and will likely keep a lid on activity for the rest of the year.

   "I expect there will be fewer transactions in 2008," says Mark Tibergien, CEO of Pershing Advisor Solutions.

   According to the study, Real Deals 2008: Definitive Information On Mergers and Acquisitions for Advisors, the average number of annual deals during the past two years leaped 37%, to 48, over the 2000-2005 period. But the slower pace in 2008 is attributed to a couple of factors, Tibergien says. The first relates to tighter capital markets. The second is because increased market volatility translates into decreased revenue and earnings at advisory practices, which makes them less attractive.

   "Sellers are saying, 'I'll wait until we're back in an upswing to demonstrate higher value,'" Tibergien says. 

   Yet overall trends point to healthy M&A activity beyond this year as some RIA firms seek to grow and others seek profitable exit strategies. The study says that 53% of RIAs either bought or considered buying another advisory firm during the past two years. The top reason for a sale or merger is to find a succession solution (37%), followed by seeking synergies with an acquirer (25%) and cashing out the equity value (17%).

   The study says advisory firms will face growing pressure to enter into deals going forward due to rising valuations, inexorable industry consolidation and staff development needs.

   There are numerous options out there for sellers, although the deal climate has shifted from an emphasis on synergistic acquisitions during the 2000-2005 period to purely financial buyers who tend to be more passive. As such, serial buyers (read: roll-up firms) have emerged as the leading player in the M&A market by accounting for one-third of all transactions during the past two years.