Preparing an agency for sale takes two to three years done properly, and most of the value is made in the first year of that. Fix the earnings, spread the client base, take yourself out of the day to day and turn more of your revenue into work that repeats. Then put the accounts, contracts and ownership records into the shape a buyer's diligence team will check. This guide sets out what to do and when.

We advise only marketing services and creative agencies, on sales, acquisitions and mergers. The same handful of issues decides the price in almost every agency sale we see, and nearly all of them could have been fixed if the owner had started earlier. What follows is the order we work through them with owners, whether the sale is one year away or five.

Why preparation starts years before the sale

A buyer values your agency on what it has already shown, usually the last two or three years of accounts, and on how believable the next two look. A change you make in the year you go to market has not yet reached those accounts, so the buyer either ignores it or discounts it. A change made two or three years out is in the numbers by the time anyone looks.

The other reason is tax and structure. Moving shares, tidying a holding company or settling a shareholder loan can all be simple with time and expensive without it. Your accountant needs runway, and so does any restructure.

None of this means you have to decide to sell. The work that makes an agency sellable is the same work that makes it more profitable and less tiring to own. We call it getting match fit: build the value now, and choose the moment later.

The plan, year by year

What to fix first

Buyers look at many things, and we have set out the 11 drivers of agency value separately. Scale matters most. After it, four of the drivers move the price more than the rest, and they are the ones to start on.

Scale. A buyer pays a multiple of earnings, so growing EBITDA raises the value twice: there is more to multiply, and a larger agency earns a higher multiple. Agencies with under 500k of EBITDA typically sell at 3.0 to 4.5 times, those earning 1.5 to 5 million at 5.0 to 7.0 times.

Profit, measured on gross profit. Agency buyers judge profit as a share of gross profit (revenue less pass-through costs such as media and production), not of revenue. EBITDA under 15% of gross profit raises questions, 20% is healthy and 25% is exceptional. The usual cause of a low figure is staff cost: much above 55% of gross profit, and over 65% in particular, reads as an agency carrying more people than its work pays for. Check that your rates are set for a margin at realistic utilisation, which for most agencies means 65 to 85% of available hours billed.

Client concentration. If one client is more than 15 to 20% of gross profit, a buyer will price in the chance of losing it, often through a lower multiple or more of the price deferred. Concentration is fixed by growing the rest of the book rather than shrinking the big client, which is another reason it needs time.

How much depends on you. The question a buyer asks is whether the agency would run for three months without you. If you hold the key client relationships, win most of the new business and sign off the work, the buyer is buying you, and will want you tied in for longer, on more of an earn-out. The fix is a leadership team that genuinely carries the load, and clients who know them.

Revenue that repeats. Retainers, rolling contracts and long-standing clients are worth more than the same revenue from one-off projects, because a buyer can rely on them. Average client tenure of more than three years, with a healthy mix of new clients, is what buyers like to see. A project business can still sell well, but it needs to impress elsewhere.

A fifth question is now coming up early in most conversations: how AI affects your revenue. Buyers want to know whether AI is already making your delivery cheaper, which is upside, and how much of your revenue sits in work clients will soon expect to pay less for, which is a discount. Being able to answer both, with numbers, puts you ahead of most agencies.

Work on three of these at a time at most. A list of ten improvements handed to a busy owner rarely moves; three, each with a measure you check every month, usually does.

Getting the evidence ready

Once a buyer is interested, every number you have shown them gets tested in due diligence. Most deals that lose value late lose it here, on something that could have been put right a year earlier.

• Monthly management accounts, produced on time and reconciling to the year-end accounts.

• Normalised earnings with evidence. Your salary adjusted to a market rate for the role, and personal or one-off costs taken out, each with the invoice or note behind it. If your add-backs come to more than half of reported EBITDA, expect them to be examined closely.

• Revenue recognition you can explain, particularly if you bill in advance or carry work in progress across the year end.

• Client and supplier contracts in writing, current, and checked for clauses that let a client leave or renegotiate on a change of ownership.

• A clean ownership record: who holds the shares and how, any options or promised equity, and loans to or from shareholders.

• People: employment contracts for everyone, sensible restraints for senior staff, and contractors correctly classified.

• The rest: leases, IP ownership of the work and any tools you have built, and data protection.

Getting yourself ready

The part owners leave latest is themselves. Before going to market, be clear on why you want to sell, the number that would make it worthwhile, and what you want to do afterwards. If there is more than one owner, make sure you agree on timing, price and the kind of buyer, because a disagreement that surfaces in front of a buyer costs credibility.

Expect to stay involved. Most agency sales include a period of working for the new owner, and often part of the price is paid later against results. Knowing how long you are willing to stay, and in what role, shapes which buyers suit you.

Mistakes we see most often

• Starting the year you want to sell, so nothing you fix has reached the accounts.

• Cutting investment to inflate profit. Buyers look at the trend and the pipeline, and a profit lifted by stopping new business shows.

• Going to market on a soft year rather than waiting for one that shows the business at its best.

• Calling an advisor only when you are ready to sell, when there is no time left to change the numbers.

• Tax advice taken after the offer, when the structure is already fixed.

• Treating completion as the finish line. For a buyer it is the start, and they are buying a plan they expect you to help deliver.

Why bring in an advisor early

Most owners call an M&A advisor when they are ready to sell. By then the price is largely set by the accounts already filed, and the advisor's job is to get the best result from the agency as it stands. Brought in two or three years earlier, the same advisor can change what is being sold: telling you what buyers will mark down, the order to fix it in, and whether the changes are showing in the numbers.

This is the work we do through Get Match Fit. We give you an honest read against the benchmarks agency buyers use, agree a plan with owners and dates, and check in against it as you work through it. When the time comes to buy, merge or sell, the same partners run the transaction, so nobody has to learn your business from scratch.

Where to start

Take the exit readiness scorecard. It takes about five minutes, nothing you enter leaves your browser, and it shows where you stand on both halves: whether the agency is worth buying, and whether it is ready to sell. If you would like a partner to look at it with you, we are always happy to have a confidential, no-obligation conversation. Start here.