Bessemer Venture Partners has invested $15 million in United Capital, the national RIA and counseling firm based in Newport Beach, Calif., that is acquiring advisory firms around the country. Bessemer's investment comes at a time when other so-called consolidators are scrambling for capital after their original private equity investors reportedly have refused to contribute more capital.

United Capital, which has completed 23 acquisitions, says the Bessemer investment will permit it to move into four to six new cities over the next 18 months, as well as expand three to five existing offices through acquisition or other means.

Joe Duran, United Capital's CEO, believes that the RIA business is at a major crossroads as it comes out of the recession and some firms find it difficult to capitalize on opportunities because of cost and margin pressures. Moreover, he thinks the prospect of higher capital gains taxes in 2011 may spur a surge in merger and acquisition activity among RIAs and others.

United Capital was launched with $5 million invested by management and board members. Prior to Bessemer, its major outside investor was Grail Partners, which made a $16 million investment. Grail's partners include former Putnam Lovell principal Don Putnam.

Other so-called consolidators have run into major financial problems as they exhausted their initial rounds of funding. Some have found themselves embroiled in tensions with acquired advisors due to arrangements that turned out to severely penalize advisors in the wake of the severe bear market. "We needed patient money and we needed an investor, not an owner," Duran explains. "No one has preferred claims on cash flows."

Advisors who merge their firms into United Capital receive a combination of cash, equity and, in some cases, notes. Duran maintains that United Capital is being run as a true old-fashioned partnership, where all advisors, managers and outside investors own the same shares of equity, and one which will not be reliant on an IPO bonanza should advisors or other investors need to monetize their interests.

In the past month, United Capital merged Capital Planning Group, which serves 350 clients and manages about $300 million, in the Fort Lauderdale and Miami areas. "They will provide access to the capital we needed to grow," says Capital Planning principal Rob Wolfe.