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Has the agency valuation bubble burst?

Most agency owners we speak to have been flattered by the hubris in the M&A market that peaked in 2021. Valuations climbed to some heady multiples of EBITDA – typically 25% above market norms. This came to an abrupt halt in Q4 2021 after the government at the time threw a hand grenade into the economy. The impact for agency owners was a burst of the pricing bubble that had grown.

This, along with disruptive AI driven content generation platforms sowing a seed of fear in the agency M&A market, has brought valuations back into line with the historical norms.

The fundamentals of an agency is that they are people businesses with a mix of repeat, contracted and one-off revenue. The more one-off revenue, the lower the quality of earnings, which has a big impact in an uncertain world particularly when you are in a period of economic uncertainty.

What I am asked most is how does this impact the EBITDA multiple so here you go:

  • Ecommerce Agency under £1m EBITDA
    • 4x – 6x multiple
    • +1x for scale
    • +1x for a high retainer business or enterprise
  • Digital Marketing Search Engine Optimisation (SEO) /Pay-Per-Click (PPC) Agency under £1m EBITDA
    • 4x – 6x multiple (upper end of this range for 80%+ retainer income)
    • +1x for scale
    • +1x for social platforms or Amazon
    • +1x for inbound
  • Digital PR Agency (Scale irrelevant)
    • 5x – 7x multiple
    • +1x for quality of creative
    • +1x for link back to technical SEO
  • Digital Agency – Content Management System (CMS)/Digital Transformation/mobile/ bespoke dev) under £1m
    • 6x – 8x multiple
    • +up to 2x for scale
    • +1x for CRM/data capability
    • +1x for multiple tech stacks
    • +1x for enterprise/public sector
  • Marketing Automation/CRM/Data Agency under £1m EBITDA
    • 6x – 8x multiple
    • +up to 2x for scale
    • +1x for enterprise
    • +1x for multi-platform
  • Creative & Integrated Agency up to £1m EBITDA
    • 4x – 5x multiple
    • +up to 2x for scale
    • +1x for unique / market leading creative
    • +1x for international


In addition to the above valuations, we are seeing an uplift of c. 1.0x for a B2B focussed client base as opposed to B2C.

The above information is based on offers put forward on businesses we are selling in the last six months or through detailed discussions with institutional and corporate buyers. It is worth noting that our proprietary intelligence on a couple of the largest exits (Brainlabs and MSQ) were both string multiples in the 10x – 13x EBITDA range.

I am always happy to chat about this as it’s my mastermind topic so get in touch with me at sam.davies@cowgills.co.uk and we can chat more if you are buying or selling an agency.


The information was correct at time of publishing but may now be out of date.

Corporate Finance
Posted by Sam Davies
9th October, 2023
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