But the real story is the number of acquired RIAs who are entertaining thoughts or are approaching their corporate parents or other financial institutions about repurchasing their firms. Fully 60% of the merger deals completed this year involved one RIA purchasing another one, although most weren't buybacks. In about 35% of the deals, holding companies were the acquirers.

"Part of this is an indication of the growing sophistication of RIAs looking to capitalize on decreased valuations [of RIA firms]," DeVoe says. "With the industry going through structural change, it's time for some [acquired firms] to look at the strategic fit."

Banks were once very active acquirers, but have been preoccupied with their own financial problems over the last year. Instead of doing acquisitions, they are strengthening their balance sheets.

"With banks, RIA acquisitions haven't generated the strategic fit that the bank hoped for," DeVoe says. Cross-selling, always a challenge, hasn't materialized to the degree many banks hoped, while cultural issues often have turned out to be more difficult to bridge than they expected.

Some advisors sold their firms to banks and expected them to open branches in their neighborhoods that would generate a steady stream of referrals. But with branch expansion plans now on hold, the raison d'etre behind the deals no longer exists.

But falling valuations of advisory firms have drawn attention from others, notably private equity firms and other institutional investors. Some are willing to finance buybacks.

Earlier this year, Dallas-based Fiduciary Network helped Sand Hill Advisors of Palo Alto, Calif., repurchase itself from Boston Private Financial Holdings. That deal may mark the beginning of a series of such transactions, according to Fiduciary Network CEO Mark Hurley.

"We feel very fortunate that several management teams have approached us to explore the potential option of a management buyback," Hurley says. "While each team has its own objectives and each deal is different, we hope that we will be able to help more than a few of them to achieve their goals."

Fiduciary Network typically buys minority equity stakes of 20% in firms and then makes "transition financing" loans to junior partners to help purchase shares from majority owners. In some cases where the parent company is a bank, the institution may also be willing to provide financing for management buyouts.

While some consolidators and roll-up firms reportedly are scrambling to raise capital or are looking at dissolving themselves because of rebellious advisors miserable with unfavorable capital structures, private equity capital continues to flow into the RIA space. In late September, Bessemer Venture Partners invested $15 million in United Capital, a national RIA and counseling firm that has completed more than 23 acquisitions around the nation.

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