Foreword
Foreword
I built and ran an agency. A fast-growing one, across Dublin and London, and I was proud of it. When the time came to sell, I thought the hard part was behind me. It was not.
I was not ready. Not the business, and not me. I did not understand how buyers valued an agency like mine, what they would pull apart in diligence, or how much of the value sat in things I had never thought to prepare. I left money on the table. Money that represented years of my life.
I was lucky. I got to do it again, and I did well out of those later deals, because by then I knew what “ready” actually looks like. What struck me was how little good information existed for an owner facing the biggest transaction of their life, and how much of it was written by people who had never sat where I was sitting.
That is why Agency Futures exists. We are not bankers. We are operators who built and sold agencies, and now help other owners get the full value of what they have built.
This playbook is the guide I wish I had. It will not make you an expert, and it is not advice on your own situation. But it will show you what buyers really pay for, and where to put your energy. The best time to start getting match fit is long before you need to.
Doug Baxter Managing Partner, Agency Futures
Start here
How to use this playbook
Dip in wherever you are on the journey. Years from any decision: start with Chapters 2 and 3. Sale on the horizon: Chapters 4, 5 and 9 are where the money is won or lost. Doing the buying: Chapter 10.
One warning up front. You will not score full marks on everything in here, and you are not meant to. No agency is perfect and no buyer expects one. The point is to see your business clearly, so you can work on the handful of things that move your outcome most. When you want to know where you stand, take the free match-fit scorecard at agencyfutures.com/matchfit.
Chapter 01
The 2026 market, and why now
Every owner wants to know if now is a good time to sell. Wrong question, but here is the honest answer first.
Deals are happening. Good agencies are still being bought, by networks, by private equity, by other independents building something bigger. But the bar has risen. Buyers are pickier, diligence is sharper, and the easy money that floated weaker businesses through a sale has gone. Quality gets away cleanly. The rest sits.
The biggest force in the room is AI. It is changing how agencies make money, what buyers pay for, and what they treat as risk. It gets its own chapter, because it now comes up in almost every valuation conversation we have.
The numbers back it up. Marketing services M&A has risen every year since 2023 and hit a fresh high in 2025, and dealmaking has carried on climbing into 2026, up another 7.5 percent year on year in the opening months (source: Capstone Partners). Deals have been changing hands at around 9.9 times EBITDA, with the middle market, agencies worth under 500 million dollars, making up the bulk of the activity. The market is active. Buyers are simply choosier about what they chase.
Marketing services M&A deals per year
430
2021
401
2022
404
2023
451
2024
459
2025 · high
Marketing services M&A transactions. Source: Capstone Partners, Marketing Services Market Update, April 2026. Volume has risen every year since 2023 to a fresh high in 2025, and dealmaking is up a further 7.5% year on year through early 2026. Deals have averaged 9.9x EV/EBITDA, with the middle market (under $500m) making up around 86% of activity.
Now the right question. Owners obsess about timing the top of the cycle. Mostly wasted energy. Nobody rings a bell at the top, and the cycle you cannot control matters far less than the readiness you can. A match-fit agency sells well in an average market. An unready one struggles in a hot one, because the things that stall a deal, owner-dependence, messy numbers, a wobbly client base, do not fix themselves when the market turns.
There is a quieter trap too: the merry-go-round of winning the next project, then the next, mistaking busy for building something worth buying. The whole job of getting match fit is turning one into the other. Readiness is the lever you control. Timing is the one you do not.
Chapter 02
The whole journey
Most guides treat selling as the only destination. We do not, because most owners are not sure yet, and the ones who rush to “sell” often should have done something else first. There are four moves, and they run in an order.
Get Match Fit. The on-ramp. Getting the business, and you, into the shape where you have real choices. This is growth advisory and exit planning under one honest name, because “exit planning” assumes you want out, and most owners are not sure they do.
Buy. Growth by acquisition: a capability, a client base, or scale, faster than you could build it.
Merge. Joining forces with another agency to make something stronger than either alone.
Sell. A full or partial sale, on the best terms you can get. Most of this book.
The line we keep coming back to: get match fit, then buy, merge or sell. All three moves go better from readiness. A match-fit agency is a better buyer, a better merger partner, and obviously a better sale.
Which move is yours? If you have energy and runway, you might buy or merge before you ever think about selling. If you are tired, or the business has plateaued, or life is pushing the decision, selling may be right, but get match fit first so you are not selling from a weak spot. And if you are in between, “get match fit and keep your options open” is a perfectly good plan.
The one thing true for all four: it starts years before you think it needs to. By the time you need to be ready, it is often too late to start.
Chapter 03
Is your agency match fit?
Most owners think about selling for years before they lift a finger to get ready for it. And that gap, between the thinking and the doing, is exactly where the money leaks away.
“Match fit” means ready twice over: ready to be bought, and ready to be sold. They are not the same thing. One is about the business being worth buying. The other is about you and your affairs being ready to let it go on good terms. A buyer will test both.
Is the business worth buying?
A clear position, backed by real work. Buyers pay for agencies known for something, competing on being the best rather than the cheapest. If an outsider cannot say what makes you different in a sentence, fix that first.
A healthy client base. Long tenures, a good mix, and no client above 15 to 20 percent of gross profit. Concentration is the first thing a buyer flags.
Revenue that repeats. Retained income is worth more than project work. Project-heavy books command lower multiples.
Profitability that holds up. The margin that matters is EBITDA as a share of gross profit. Twenty percent and above is healthy, below fifteen needs attention. Why gross profit? Next chapter.
A business that runs without you. The big one. If the agency and its key relationships live in your head, the buyer is buying a risk, not an asset.
Clean, documented operations that survive a key person leaving.
A new-business engine that does not depend entirely on the founder’s contacts.
AI-readiness. New for 2026, and increasingly probed: are you using AI to improve margins and protect your relevance, or are you exposed to it? Chapter 7.
Are you ready to sell it?
Clarity of intent. You and any co-owners aligned on why, what buyer, and what comes after. Deals wobble when owners are not aligned.
Numbers that stand up. Current management accounts, personal and one-off costs separated, add-backs you can evidence. This is where credibility is earned or lost.
Housekeeping in order. Cap table tidy, contracts documented and transferable, tax position understood early.
This is not a tidy-up you do the month before a sale. We have watched founders turn down offers most would have jumped at, then spend the years afterwards building a leadership team so the business no longer lived or died by them. That is what match fit looks like: not a scramble at the end, but the slow work of building the thing a buyer actually wants.
Your weakest areas are your to-do list. In our experience the three that most often move value are owner reliance, client concentration, and clean, evidenced numbers. Start there.
Chapter 04
What’s it worth?
The question every owner asks first, and the one most guides duck. We will not give you a number in a book, but we can show you exactly how buyers get to one.
Start with the right top line. Agency finance has one enduring confusion: gross versus net. Gross revenue is all your billings, including third-party costs you rebill (media, production, talent). It shows scale, and we never hide it. Take off those pass-through costs and you get gross profit, also called net revenue. That is your agency’s own income, and the number that matters for valuation.
The revenue ladder
Gross revenue
all billings, including pass-through media, production and talent
− pass-through cost of sales
Gross profit
= net revenue · the number that matters for valuation
− operating costs
EBITDA
15–25% of gross profit is healthy
The margin that matters is EBITDA on gross profit. Not on billings. Healthy agencies run fifteen to twenty-five percent, with twenty plus considered strong. Judge yourself, and expect to be judged, on gross profit.
Then normalise. Reported profit is not what a buyer is buying. Normalisation shows the true ongoing earnings once the quirks of private ownership are stripped out. The main add-backs: owner compensation brought to a market rate (roughly 150,000 to 220,000 in your currency for an owner-manager, adjusted for role and size); personal costs a new owner would not carry; and genuine one-offs. Every line gets challenged by the buyer’s accountant, so every line needs evidence. We even deduct non-recurring revenue, because honesty on the way down earns trust on the way up.
Two numbers, not one. Normalised EBITDA for strategic and PE buyers who bring their own management. SDE (seller’s discretionary earnings), which adds your whole owner package back, for owner-operators and search-fund buyers who will run it themselves.
Bands and multiples. Value is broadly a multiple of normalised EBITDA, rising with scale, quality and growth.
Band
Normalised EBITDA
Typical multiple
Micro
under 500k
2.5x to 3.5x
Small
500k to 1.5m
3.0x to 4.5x
Lower mid-market
1.5m to 5m
4.0x to 6.0x
Mid-market
5m to 20m
6.0x to 9.0x
Strategic asset
recurring revenue, clear growth, rare capability
add 1 to 3x to the multiple above
Where you land in a band is decided by the Chapter 3 drivers. Concentration, owner-dependence and project-heavy revenue compress the multiple. Recurring revenue, growth and rare capability expand it.
But do not fall in love with the multiple. It is the number everyone fixates on, and it is a poor proxy for the quality of a deal.
And the part most owners miss: you are usually paid on forward performance, not today’s number. For a growing agency, most of the value sits ahead of the trailing accounts, and no buyer pays today for growth they have not seen. The structure bridges that gap. That is Chapter 9.
You are not selling last year's profit. You are selling the next three years, and getting paid as they arrive.
Chapter 05
The hidden value levers
Revenue is the number owners chase. Profit is the number buyers pay on. And you can usually move your profit further, and faster, than your revenue, mostly from inside your own four walls.
Profit will set you free.
One of our favourite sayings, picked up years ago from an old holdco boss, and it has never been truer.
The levers, in rough order of how much they move your value:
Gross margin. The story above. The gap between what you bill and what it costs to deliver is more moveable than owners assume, and it drops almost straight through to profit.
Recurring revenue. Retained income lifts the multiple, not just the profit. Shift even part of the book from project to retainer and you change how a buyer sees the business.
Client concentration. One client at 40 percent of gross profit is a discount waiting to happen. Risk is what compresses your multiple.
Owner-dependence. Chapter 3’s big one. Every relationship you move off your own desk makes the business worth more.
Working capital. The quiet one. How much cash the business needs to run, and how retainers and pre-bills are timed, feeds straight into what you take home. It returns in Chapter 9, where it quietly leaks value in the deal itself.
Pick the lever with the most give, the one you can genuinely chase this year, and go after it.
Chapter 06
Who buys agencies in 2026
“Who would even buy us?” More people than you think, but they want different things and pay in different ways. Knowing which buyer you are dressing for changes how you prepare.
Strategics (networks and holdcos). They buy a capability, a client, or a market. They pay well for genuine fit and usually bring their own management, so they value normalised profit. The old holdco land-grab has cooled; today’s strategic buyer is selective.
PE-backed platforms and consolidators. Private equity builds a platform and bolts on. Numbers-led, in love with recurring revenue, and they usually keep founders in for an earn-out. Expect sharp diligence and a structure that shares the upside.
Search funds and ETA buyers. The pool most owners have not heard of: individuals buying a single business to run it themselves. For smaller agencies this is increasingly where the real buyers are. In the US they often use an SBA loan plus a seller note, and they look at SDE, not just normalised profit. They screen for recurring revenue, low concentration and low founder-dependence, which is exactly the match-fit checklist.
International buyers. A buyer in another market may pay a premium to plant a flag in yours. Cross-border adds complexity, but the strategic value can be higher precisely because they cannot build what you have from scratch.
How they pay differs too. A strategic pays more upfront for certainty. A PE platform leans on the earn-out. A searcher’s offer is shaped by what a lender will fund. Same agency, three different-shaped deals.
One more route worth knowing: networks and alliances. Some ambitious independents join a network for international reach while staying independent, a halfway house between going it alone and being acquired.
We keep a live buyer network across North America, Europe and Asia Pacific, which is really a way of saying we spend our days learning who is actually buying, what they want, and how they behave once the ink is dry. That last part matters more than owners expect.
Chapter 07
AI and agency value
No serious conversation about agency value in 2026 skips AI. Think about it three ways.
AI as a driver. It is compressing the old billable-hours model, and buyers know it. An agency still selling time as if nothing has changed looks exposed. One that has adapted looks like it has a future.
AI as a value lever. Used well, AI lifts margin, creates defensible IP (your own tools and workflows), and opens productised services that scale better than bodies. All of it shows up in the numbers buyers care about. As one guest put it on our podcast: AI as a creative and delivery tool, not a replacement for the thinking, is where lean agencies are finding an edge.
AI as a risk buyers now price. If AI could disintermediate your core service, or your margins lean on work a client could soon do with a tool, a buyer will discount for it. Over-reliance cuts both ways: AI with no human judgement on top is its own red flag.
So evidence your AI-readiness. Do not just say you “use AI.” Show where it improved margin, what you built that a competitor has not, and how it makes your client work stickier. An owner who can answer those turns buyer anxiety into a reason to pay more.
And our side of it, what we call M&AI. Selling an agency is a game of information, and the buyer almost always holds more of it. They have done a hundred deals; you are doing one. We close that gap with our own experience, built over hundreds of transactions, plus a set of smart models we have developed and now infused with AI, to rebalance the buyer-seller asymmetry that sits under so many of the deals we see. It brings a seller’s numbers, story and preparation up to the standard a professional buyer brings, so you walk in as an equal. On a live deal that means handling confidential financials with real care: our models and AI help us think faster and see more, but they do not make the calls, and they never see what they should not.
AI is not a threat to your agency’s value, and not a magic lift to it. It is a lens buyers now look through. Get in front of it, and it works for you.
Chapter 08
How a sale actually runs
The process scares owners more than it should, mostly because they cannot see it. Here is what happens.
First, get sale-ready (four to eight weeks). Numbers normalised and defensible, equity story straight, core materials built. If preparation surfaces real value gaps, we might pause for an exit-planning sprint, because it is far cheaper to fix them now than have a buyer find them later. Rushing this stage is the most common own goal in the whole process.
The materials. Three things do most of the work. The teaser: a short, blind summary that markets the opportunity without naming you. The CIM: the full story, numbers, clients, team and growth case, released only under NDA. The data room: a secure, organised store for diligence, run in tiers so nothing goes out before it should.
NDAs before anything sensitive. No buyer sees the CIM or data room until they have signed. Obvious, and exactly where casual processes leak.
Then a competitive process (nine to twelve months, go-to-market to completion). The single biggest lever on your final terms is having more than one interested party. A buyer who knows they are the only game in town behaves very differently from one who knows they are not.
Through all of it, you still have an agency to run. A sale is a second full-time job landing on top of your first, at exactly the moment the business must keep performing, because buyers watch your numbers all the way to completion. Protecting the day job is a big part of what an adviser is for. We carry the process so you can carry the business.
And you do not do this alone. A proper deal team: an M&A adviser to run the process and hold the line on value, a corporate lawyer to paper it (not your general solicitor), and a tax adviser so you keep what you earn. The cost of good advice is small next to the value it protects.
Chapter 09
Deal structures and getting paid
A good number in an offer is not the same as a good deal. How you are paid, and what has to be true for you to actually receive it, matters as much as the headline. This is the chapter owners thank us for later.
The starting point: debt-free, cash-free. Most agency deals leave you your cash and clear the debt at completion; the price is for the business itself. Understand your net proceeds, not just the headline.
Upfront versus earn-out. Rarely is the whole price paid on day one, and for a growing agency it should not be, because that would mean the buyer paying in full for growth that has not happened yet. The bridge is an earn-out.
Our standard structure: L3+3. Built for exactly the growth-story sale. The enterprise value is struck on the forward three-year average EBITDA, the years you believe in. Roughly half is paid at completion, calculated on a conservative base, usually a trailing three-year average, though sometimes the last twelve months (LTM) where that better reflects the business. The balance is paid across a three-year earn-out, each year settled on actual results. At the end, a true-up squares the whole deal: the average of the three earn-out years, times the agreed multiple, sets the final value, and any balance still owed against what you have already been paid is settled then. You are paid for the growth you are confident in, and the buyer only pays as it materialises. It closes the gap that otherwise stalls deals.
L3+3: how you get paid
Completion
~50%, on a conservative trailing 3-yr average (or LTM)
Year 1
earn-out
Year 2
earn-out
Year 3
earn-out
True-up
3-yr earn-out average × the agreed multiple
Value is struck on the forward three-year average. Half is paid at completion on a conservative base (a trailing three-year average, or sometimes the last twelve months). The balance runs across three earn-out years, then a true-up squares the deal to the average of those three years times the agreed multiple.
The mechanics that decide whether you keep the value:
Escrow / holdback. Less common in agency deals than in other sectors, precisely because so much of the value already sits on the back end in the earn-out. It turns up occasionally rather than as a rule, but if it does, negotiate the amount and duration hard.
The working-capital adjustment. The quiet one. Buyers expect a “normal” level of working capital left in, and the price adjusts against a target. For agencies, watch deferred revenue and retainers billed in advance: handled loosely, it quietly pulls cash out of your proceeds. Get the definition and target agreed, and floored, up front.
What the earn-out is measured on. Where deals are quietly won or lost. Which metric, whose numbers, and who controls the calculation after completion? Get the metric defined, the accounting policies agreed, and an audit right and dispute mechanism written in. An earn-out you cannot verify is a hope, not a term.
The LOI traps we look for:
Earn-out forfeiture if you leave for any reason. Insist on carve-outs for death, disability and termination without cause.
The buyer controlling the earn-out calculation with no audit right.
A metric switch buried in the detail, or a target set against the wrong baseline.
A working-capital adjustment with no floor, quietly reducing completion cash.
A long payment lag. 180 days where 60 to 90 is fair.
We recently reviewed an offer that looked, on its headline, like a strong seven-figure deal. Read closely: the earn-out was forfeitable if the founder stepped back, the buyer alone would calculate it, and the working-capital wording let them claw back most of the completion cash. The realistic value was a fraction of the headline. That is the difference between a good number and a good deal, and the whole reason to have someone in your corner who has read a hundred of these.
The terms worth making your lawyer earn their fee on. We are advisers, not lawyers, and none of this is legal advice. But commercially, these decide how much you keep and what your life looks like afterwards: the earn-out metric and who controls it; the working-capital target and its floor; good-leaver versus bad-leaver terms; escrow amount and duration; the payment timetable and any set-off; and what you are restrained from doing afterwards. You do not need to become a lawyer. You need to know which terms to point yours at.
And sometimes the buyer does not really want your agency at all. They want you.
Chapter 10
Buying and merging
Some readers are the buyer, or should be. The same match-fit thinking applies, from the other side of the table.
Buying: managed search. The best targets are usually not for sale, which is why we run a managed search: define exactly what you want, map the market, approach targets directly and discreetly. Proactive, not reactive.
Get the criteria right first. The temptation is to buy revenue. The better question: what capability, client or market do we want, and could we build it faster than buy it? On our podcast, The Many described acquiring an immersive-technology studio precisely to own a capability rather than keep renting it, and moving early, before that capability got expensive. That is the logic to copy.
The approach is delicate. Handled badly it spooks the owner, leaks, or starts the price high. Handled well, it opens a conversation the owner may quietly have been waiting for. This is where a buy-side adviser earns their keep: making the approach without you showing your hand.
Then the hard part: integration. Most deals that disappoint do so after completion. The number looked right and the businesses never became one. Which brings us to the thing that decides it:
Cultural fit is not a soft factor. It is the single biggest predictor of whether a deal works once the lawyers go home. Two agencies can look perfect on paper and grind each other down, or look like an odd couple and thrive. Before you fixate on the numbers, ask whether these are people your people could actually work with.
Merging. A merger is a deal with no clean buyer and seller: two agencies combining, both sets of owners rolling value into the new whole. It can be the best of both worlds, scale and diversification without cashing out. It is also the hardest to get right, because who leads, who owns what, and whose name goes on the door must be settled with real honesty up front.
Whichever move: know what you want, prepare properly, and never let the number blind you to the fit.
Chapter 11
Real outcomes
Frameworks are useful. Deals are proof. All of these are public, and every one turned on the things this playbook keeps coming back to.
BAM and LLYC. BAM is a San Diego PR and marketing agency for tech companies. Its owners wanted a partner who could take the business global without flattening what made it good. We ran the sell-side process, built the shortlist and brought LLYC, a Spanish global communications group, to the table: an initial majority stake in a deal valued around US$13 million, with the balance tied to performance over the following years. The lesson: the right strategic buyer pays for what you are, not only what you earned last year.
Holy Cow! Creative and Heads & Tales. Holy Cow! is a Sydney design agency, thirty years in, known for health, wellbeing and retail. We advised on its sale to Heads & Tales, part of Hardie Grant Media. It went in as a division rather than being swallowed, the founder stayed on to run it, and the clients gained a network. The lesson: cultural fit often decides whether a deal works the day after completion.
The Many acquires CatalystXR. Not every story is a sale. The Many wanted to own immersive-technology capability rather than keep buying it in project by project. We advised buy-side; they took a majority stake in CatalystXR, moving early, before that capability got expensive, and the founder joined to lead the practice. The lesson: buying is a growth strategy too.
PinPoint Media and PrettyGreen. PinPoint is a UK performance-marketing agency with its own AI-enabled stack. PrettyGreen, an independent UK creative-communications group building by acquisition, wanted exactly that in-house. The founder folded PinPoint into the group while keeping a meaningful stake and staying CEO. The lesson: a sale does not have to mean walking away.
The firm
Working with Agency Futures
We are not bankers, and not a big faceless firm. We are operators who built and sold agencies ourselves, and now spend our days helping other owners get the full value of what they have built.
Because we have seen so many agencies, spoken to so many owners, and run the ruler over the finance and operations of so many businesses, we have always got a perspective. Most of the owners we work with tell us the counsel is the thing they value most, and it is simple why. We know what good looks like.
We work across the whole journey, Get Match Fit first, then buy, merge or sell, from Barcelona, Denver and Sydney, with a live buyer network across North America, Europe and Asia Pacific. Partner-led, and only with marketing services agencies, because that focus is how we know the sector as deeply as we do.
Reference
A short glossary
CIM: the confidential document that tells the business’s full story to NDA-signed buyers.
Teaser: a short, anonymous summary used to gauge interest without revealing who you are.
EBITDA: earnings before interest, tax, depreciation and amortisation.
Normalisation / add-backs: adjusting reported profit to the true, ongoing earnings a buyer is buying.
SDE: normalised profit plus the owner’s total package, used by owner-operator buyers.
Gross profit / net revenue: revenue after pass-through costs. The right basis for agency valuation.
Earn-out: part of the price paid over time, tied to future performance.
L3+3: our standard structure. Value on a forward three-year average, part paid at completion on a trailing average, the balance over a three-year earn-out with a true-up.
Working-capital adjustment: a price adjustment for the working capital left in the business.
Data room: the secure document store a buyer reviews in diligence.
Reference
Disclaimer
This playbook is general information, not advice tailored to your situation. Valuation ranges and structures are illustrative. Nothing here is legal, tax or financial advice. Before acting, take professional advice on your own circumstances.