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The Bank of New York Mellon's Pershing Advisor Solutions Unit Releases New Study Highlighting Mergers & Acquisitions Activity for Independent Registered Investment Advisors

Jersey City, N.J., August 1, 2008 — Pershing Advisor Solutions LLC, a subsidiary of The Bank of New York Mellon Corporation, released a new independent study today with Moss Adams LLP entitled Real Deals 2008: Definitive Information on Mergers and Acquisitions for Advisors.

The study reviews the mergers and acquisitions market in the independent registered investment advisory (RIA) industry over the past decade and benchmarks key changes in the marketplace since Pershing Advisor Solutions' previous study with Moss Adams entitled Real Deals: Definitive Information on Mergers and Acquisitions for Advisors, published in 2006. The report provides a framework for advisory firm owners to evaluate various transaction options, including guidelines that review the advantages and disadvantages of each deal type. According to the study, the average number of annual deals rose 37% in the last two years and the increase in acquisitions shows long-term signs of sustainability. Highlights from the study include:

• Let's Make A Deal: RIAs are looking for a deal. At least once within the last two years 53% of RIAs either bought or considered buying another advisory firm. RIAs who want to buy are predominantly looking to access new markets or for an acceleration of growth by improving leverage or capacity. According to the study, the most important drivers for a firm sale or merger are as follows: 37% of advisors are seeking a succession solution, 25% are aiming to achieve synergies with an acquirer, 17% are looking to cash out their equity value, 9% are motivated by financial rewards, 5% view the transaction to be in their clients' best interest and 7% courted a sale or merger for other reasons than those listed;
• Supply Meets Demand: Advisors in 2008 have many more options for creating liquidity or raising capital than they did two years ago, as recorded in Real Deals 2006. While ad hoc bank purchases represented the predominant deal type during the first half of the current decade, serial buyers have emerged over the last two years as the leading investor type. Serial buyers, whose strategies center on making multiple advisory firm deals, accounted for more than one-third of transactions during the 2006-2007 period;
• The Changing Buyer Landscape: Real Deals 2006 data illustrated that most deals were situational and, in general, motivation was primarily synergistic. Today, synergistic deals are overshadowed by purely financial buyers who tend to be passive, or financially motivated serial buyers who seek to add value with existing capabilities, such as by integrating complimentary services or leveraging general scale efficiencies. These buyers are more interested in near-term financial gain than in deals that complement their strategies. Consistent with their financial orientation, they have added greater complexity to deal terms, shifting more risk to sellers and making actual value difficult to gauge;
• Transaction Activity is Intensifying: Mergers and acquisitions are building stronger firms, creating synergies, enabling efficiencies and providing training and development opportunities for a new generation of advisory firm leaders. Real Deals 2006 highlighted an active and growing seller's market for advisory firms. Since this time, a record number of deals have been made, driven by both the supply side and the demand side. The annual number of transactions involving investment advisory firms averaged 35 during the 2000-2005 period examined in Real Deals 2006. The average number of annual deals in the two years since that study has jumped 37%, to 48 and despite a slowing of transaction activity in early 2008, the long-term trend of an increasing number of deals remains strong;
• Understanding the Implications: Transaction trends are promising to reshape the industry. The implications of this new environment will affect most firms — regardless of their current interest in such transactions. They will face growing pressure to enter into deals in light of rising valuations, consolidation and staff development needs. Understanding the long-term implications of the various deal structures and buyer options is critical for advisory firm owners; and
• Being Prepared: Whether a deal is in their immediate future, advisory firm owners must continually invest in their firms, build transferable value and position their firms as if a transaction were immediately pending. When the time is right to pursue a transaction, it must be done deliberately and with clear purpose. The best-prepared firms are organized as businesses built to last and possess solid management, an orientation toward growth, depth of talent and sustained profitability.