Sourse: Ad Age
The marketing services M&A landscape is shifting. In a market where multiples can still be attractive, buyers – from holding companies to private equity and emerging platforms – are becoming more selective, looking more strategically to assess long-term value.
Agency leaders often ask why one agency receives a 10x+ multiple while others – equally creative or even more experienced – are only receiving a 5x or 6x multiple. The answer almost always lies in the structure, scalability and story behind the business. Here are six strategic takeaways to help agency leaders increase enterprise value and position themselves for a stronger outcome, whether in a sale next year or five years from now.
Strategic positioning + clear objectives
Buyers place more value on agencies that have a clear, differentiated position in the market that gives them a clear advantage over competitors, allowing them to scale quickly. This could be a deep vertical expertise or agencies that are tightly aligned with specific disciplines – be it health, B2B, creative and/or media, e-commerce or retail media – are seen as more defensible and less commoditized.
One essential method for facilitating this process is to establish an exit strategy, regardless of whether you intend to implement it. Ask your financial wealth advisor what the number is that you need and consider what you want from a professional and personal level, one year out, three years out and five years out.
Size matters
A smaller agency may not deliver enough ROI to justify value and costs. Regardless of size, the costs for an acquirer to buy an agency can range from $500,000 to $1 million in transaction-related fees. The buyer needs to add these costs to the value paid and compare it to the EBITDA they will earn in the future to understand the true ROI. Scale is also a differentiating factor. There are not too many agencies with revenue between $15 million to $100 million. Due to limited supply, demand increases as does price.
Sustainable growth is valued more than high margins alone
One of the biggest myths in agency valuation is that high EBITDA margins automatically yield high multiples. In reality, buyers like high margins, but they will pay more for growth than for profitability – especially growth that’s steady, measurable and supported by smart forecasting. Agencies growing 30%+ per year are often seen as dynamic, market-leading and well-positioned to scale, making them more attractive to PE firms or strategic buyers looking to bolt on expansion.
Margins still matter. A typical range of 20% to 30% EBITDA (earnings before interest, taxes, depreciation and amortization) is healthy, but going above 30% can raise sustainability concerns. If high margins come at the cost of under-resourcing or employee burnout, the buyer may discount for future investment needed.
Diversification is critical to reducing risk
Client concentration is one of the fastest ways to discount an agency’s value. If a single client represents more than 20% of revenue – or if your top three make up more than 50% – buyers will either walk away or lower their offer. While some high-concentration deals do get done, they tend to be risk-adjusted with lower upfront payments and more aggressive earnouts. Agencies with broader client bases and less reliance on a few accounts are seen as more stable and resilient, especially in uncertain market cycles.
Timing the market is just as important as performance
Buyers go through investment cycles, often influenced by broader economic trends, internal portfolio needs or market saturation. Agencies that succeed in capturing premium multiples tend to get two things right: differentiation and timing.
There is heightened interest today in agencies specializing in influencer and social media, AI enablement, retail media, e-commerce and creative with media. But that window won’t stay open forever. When buyers are still shaping their strategies, they’ll pay more for a category leader. Once bets are placed, multiples shrink. Wait too long, and you’ll be just another player in a crowded space.
Operational discipline builds confidence
Buyers look for more than good work – they want to know the agency is run like a business. Without scalable systems, strong operations and the ability for continued growth, buyer interest can fade quickly. That means:
- Clean financials and accurate forecasting
- Clear strategic and financial goals
- Leadership alignment across partners
- Smart use of technology (especially AI) to drive efficiency
Agencies that embrace operational rigor – and build systems for accountability, agility and optimization – are easier to integrate, easier to scale and ultimately worth more. Flexibility and the willingness to pivot (based on market data, not gut feeling) can also help de-risk future growth plans.
Ultimately, what sells is a strong story – one that connects with a buyer’s strategic vision, shows proven performance and points toward future growth. If you want a better multiple, don’t wait for someone else’s playbook to apply to your business. Build your value intentionally – with clarity, scale and growth at the core – and you’ll be in a far stronger position when you are ready to run a sale process.
