Full Service Agency Valuation
Understanding how full service agencies are valued in M&A transactions is essential whether you are preparing to sell or evaluating an acquisition opportunity. Full Service Agencies have distinct valuation characteristics that reflect their service model, margin profile, and risk factors. The primary valuation metric for this agency type is EBITDA, with typical multiples ranging from 4-5.5x for well-run agencies.
Full service agencies are valued on EBITDA with multiples reflecting the breadth and depth of client relationships, the strength of the management team, and the profitability across service lines. Buyers evaluate each service line independently before assessing the combined value — an agency that generates 25% margins in digital but loses money in events is less attractive than one with consistent 18% margins across all disciplines.
How Full Service Agencies Are Valued
The standard approach to valuing a full service agency starts with calculating trailing twelve-month EBITDA, then applying a multiple based on the agency’s growth rate, client quality, team depth, and operational efficiency. For owner-operated full service agencies under $1.5M in revenue, SDE (Seller’s Discretionary Earnings) may be the more appropriate metric since it accounts for the owner’s total compensation and personal expenses run through the business.
Buyers will reconstruct your financials from three years of P&L statements, tax returns, and bank statements. They look for consistency and growth — a single strong year followed by decline raises more questions than steady 10-15% annual growth. For full service agencies specifically, they also scrutinize the split between recurring retainer revenue and one-off project work, as retainer revenue is valued at a significant premium.
Key Value Drivers for Full Service Agencies
These factors push full service agency valuations to the upper end of the multiple range:
- Large retainer clients with multi-year histories
- Cross-sell success between service lines
- Strong department heads who can operate independently
- Consistent margins across all service lines
- Integrated campaign delivery capabilities
- Diversified revenue across 3+ disciplines
- Client retention above 85% with high NPS
Full Service Agency Valuation Multiples
| Metric | Below Average | Average | Above Average |
|---|---|---|---|
| EBITDA Multiple | 3-4x | 4-5.5x | 5.5-7x |
| Revenue Multiple | 0.5-0.8x | 0.8-1.1x | 1.1-1.5x |
| SDE Multiple (owner-operated) | 2-3x | 3-3.5x | 3.5-4.5x |
These ranges reflect the current market for full service agency transactions. Individual valuations can fall above or below these ranges based on exceptional circumstances — a rapidly growing agency with proprietary technology might exceed the top range, while an agency in decline with heavy client concentration could fall below.
Example Valuation
Consider a full service agency generating $5M in annual revenue with an EBITDA margin of 18%, producing $900K in EBITDA. At a 5x multiple — which reflects a solid but not exceptional agency — the enterprise value would be approximately $4.5M. To push that multiple higher, the agency would need to demonstrate several of the value drivers listed above, particularly strong client retention, team depth, and consistent growth.
What Decreases a Full Service Agency’s Value?
These factors compress full service agency valuations and signal higher risk to buyers:
- Unprofitable service lines subsidized by profitable ones
- Founder as the only senior strategic voice
- Service lines operating as silos with no integration
- Heavy client concentration in a single service line
- Management team that cannot operate without founder oversight
The good news is that most of these value detractors can be addressed with 12-18 months of preparation before going to market. Starting early gives you time to strengthen weak areas and present the strongest possible version of your agency to buyers.
Get Your Full Service Agency Valued
Whether you are ready to sell now or planning an exit in the next few years, understanding your current valuation is the essential first step. Our free agency valuation tool provides an honest, data-driven assessment tailored to full service agencies.
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