Agency Valuation
Agency Valuation
How agency valuations actually work – and what really drives value
Agency valuation is one of the most misunderstood parts of running an agency.
Most founders only encounter it late – often under pressure – and are given vague answers, optimistic multiples, or rules of thumb that don’t reflect how buyers actually think.
This page exists to give agency owners a clear, realistic understanding of how agencies are valued, long before they’re forced to make decisions.
How agency valuations work
At its core, an agency valuation is not a formula – it’s a judgement.
Buyers look at:
- sustainable profit, not revenue
- risk, not just growth
- transferability, not founder heroics
Most agencies are valued as a multiple of maintainable EBITDA, adjusted for:
- client concentration
- dependency on founders
- growth trajectory
- margin quality
- operational maturity
Two agencies with identical profits can attract very different valuations depending on how predictable and transferable the business actually is.
Understanding this early changes how you run the agency.
What affects the value of an agency
Valuation is shaped by a combination of financial, operational, and structural factors.
Common value drivers include:
- consistent, recurring revenue
- diversified client base
- strong margins with discipline
- credible management beyond the founder
- clear positioning and specialism
And common value killers include:
- x over-reliance on one or two clients
- x revenue tied directly to the founder
- x weak financial reporting
- x aggressive growth masking margin erosion
- x unclear post-sale narrative
Most of these factors are within your control – if you address them early enough.
Agency valuation multiples explained
Multiples are often talked about as if they’re fixed. They’re not.
In reality, multiples are influenced by:
- agency size
- quality of earnings
- buyer type
- market conditions
- deal structure
Smaller agencies typically trade at lower multiples not because they’re “bad businesses”, but because risk is harder to diversify.
Larger, well-structured agencies attract higher multiples because buyers can scale, integrate, or hold them with confidence.
Valuation by agency size
Agency size plays a significant role in how buyers approach valuation.
Sub-scale agencies
face higher perceived risk
Mid-sized agencies
attract the widest buyer pool
Larger agencies
unlock strategic and platform buyers
As size increases, buyers focus less on founder capability and more on systems, teams, and repeatability.
Understanding where your agency sits – and what the next size band unlocks – helps you decide whether to sell now or invest further.
Is your agency ready to be valued?
Not every agency is ready for a meaningful valuation – and that’s not a failure.
Many founders benefit from understanding readiness gaps well before going to market, so they can address them deliberately rather than reactively.
Valuation as a decision tool, not a sales trigger
You don’t need to be selling your agency to care about valuation.
The earlier you understand how value is created – and lost – the more control you retain over the eventual outcome.