For brokerages looking to add scale to their asset-management business, some believe it's a good time to explore acquisition opportunities.

As some smaller and midsize asset-management firms struggle to survive due to the decrease in clients and revenues in the bear market, more firms will look to sell. This bodes well for firms looking to increase their asset-management business; they might be able to acquire firms at cheaper prices than a year ago owing to market conditions.

The search for asset managers to buy is something of a turnaround. In recent years, Merrill Lynch, now a unit of Bank of America Corp. (BAC); and Smith Barney, a unit of Citigroup Inc. (C) that is joining a joint venture with Morgan Stanley's (MS) brokerage arm on Monday, sold their asset-management arms. One issue was the inherent conflict of interest when brokers sell funds affiliated with their firm.

Asset managers are also under pressure to sell after distribution channels have narrowed in the industry; some brokerage firms, for instance, have closed or merged. "There has been a consolidation of the distribution channel, and the sheer number of advisory firms is declining," said Mark Halverson, senior executive in Accenture's capital markets practice.

Burt Greenwald, a Philadelphia fund consultant, said, "If a company fails to have a real marquee fund, it is very difficult to get distribution."

However, the asset management business can be a large revenue source for firms, and once the market turns around, firms will likely start to see client inflows.

Merger and acquisition activity might pick up in the sector over the coming months as firms will want to partner to increase distribution.

"Brokerages are looking to increase revenues and market share by offering a broader scale of products to serve investors," said Halverson.

One brokerage exploring possible deals is Ameriprise Financial Inc. (AMP). Chief Executive James Cracchiolo said Friday at the Sanford C. Bernstein Strategic Decisions conference that opportunities are coming up "more and more" in the market. The two areas the brokerage may look to augment are its retail-distribution and asset-management capabilities.

Some firms have already hung up the for sale sign. For example, Bank of America has expressed plans to sell its Columbia Management Group, which it acquired during the FleetBoston Financial acquisition five years ago. Bank of America is looking to sell the division because of its need for capital.

According to reports, one potential buyer for Delaware Investments, part of Lincoln National Corp. (LNC), is Aberdeen Asset Management PLC (ADN.LN).

However, price might be a challenge. Small and medium firms want more muscle behind their distribution, but they might not be willing to accept the low price that a large firm is offering, said Greenwald. The feeling of strong firms is that "now is a good time to pick up the crippled firms around the battlefield," he said, adding, firms are hoping that eventually their offers will be accepted.

-By Jessica Papini, Dow Jones Newswires; 201-938-2437; jessica.papini@dowjones.com