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Ewan Robertson, partner of London-based law firm Dundas & Wilson, said despite property prices falling 13.7 per cent in the last year, according to Halifax, advisory firms were being valued at 15 to 20 per cent less in October 2008 than in October 2007.

To put this in context, Mr Robertson, who has advised on deals including Axa's £100m acquisition of Thinc Destini and Royal London's purchase by Investment Funds Direct Group Limited, said there were fewer deals being done today than a year ago.

But he said those that were trying to exit the market now were mustering less cash as they were suffering from banks' more stringent lending criteria and were starting to be hit by the fact they were doing less business at the end of 2008 than they were a year ago.

Mr Robertson said: "It is now a buyers' market rather than a sellers' market. You could say that in the past there were a lot of deals that were close to being overpriced. This created a perception that their businesses were worth more than they could now obtain for them."

Colin Fergusson, partner of Dundas & Wilson, said there was no shortage of top quality intermediary propositions in the market and banks had good businesses coming to them that they would have snapped up just a year ago.

He said: "It is also being driven by caution among the banks. Banks that may have supported acquisition plans in the past at the moment are saying businesses should digest what they have already eaten before trying to swallow any more."

Mr Fergusson said next year publicly-listed intermediaries could also come under pressure to sell their businesses from shareholders keen to take their cash and exit the financial services sector.

But Mr Robertson said it looked like the market could be turning a corner as in the last couple of weeks he had received more inquiries about merger and acquisition activity than in the last three months of this year.

However, both Mr Fergusson and Mr Robertson said buyers were likely to be those who had already been keeping a close eye on certain intermediary businesses and had simply been waiting for management to come down to a price they considered was right.

Mr Fergusson also said a far greater number of potential purchasers of financial services firms that he was now talking to were based overseas.