Valuation Multiples For Marketing Agencies



Share on facebook
Share on linkedin
Share on email

How the market values any asset is a function of the supply and demand for that asset. Marketing agencies are no different. In terms of valuation, we see 90% of marketing agencies fall between is 2 – 3.5 X annual profit. Where your business fits into this valuation spectrum is determined by how your business fits the following criteria.

agency office

Business Age

The longer the agencies productive life, the better. Reputations, client relationships and domains all become stronger with time. All other factors being equal, the older a business is, the better.

Size of Clients

In a perfect world, agencies would not have to deliver monthly reports to their clients, answer client’s continuous questions and find a pipeline of new clients to onboard. However, this is the case for a large number of marketing businesses. The few businesses who only work with large, reputable clients have a leg up on the competition in terms of valuation.


The businesses reputation is its main asset. A few poor reviews can drive off potential buyers at first glance.

If the agencies reputation and organic rankings are so strong that it is able to generate inbound leads on autopilot, this will increase its value in the eyes of buyers.

Churn Rate

Keeping your clients for a long period of time means that the business has been derisked to some extent. It also means that the new owner can turn their attention to marketing the business for future growth as opposed to maintaining relationships with current clientele. We have observed that churn rate and reputation typically go hand in hand.

Proven Funnel

If the business has processes in place to bring on new clients, this means less risk for the buyer. If the business is reliant on the owner being the sales person, then there is not marketing funnels that come with the business at all and this represents risk to the buyer.

Hand drawing sales funnel business concept with black marker on transparent glass board.

Management Team In Place

If the agency has processes and procedures in place, this is good. If it has processes, procedures and people in place, that’s even better. Generally speaking, the fewer roles the buyer has to fill, the better.


As with all small to mid-sized businesses, the larger the business is, the fewer sellers there are, the more a buyer will need to pay for the business.

As businesses creep north of $2M in annual profit, there are family offices, private equity firms and larger strategic acquirers that are in cash positions to purchase businesses that check all of their boxes. It wouldn’t be uncommon to see a marketing agency sell for 4.5 – 5 X annual profit once it crests the $5M annual profit threshold.

For additional information on selling a marketing agency, read our blog on how to sell a marketing agency or take a look at our valuation calculator for marketing agencies here.


Share on facebook
Share on linkedin
Share on email

One Response

Leave a Reply

Your email address will not be published. Required fields are marked *