Last Updated: May 23, 2024
This report aggregates EBITDA multiples and valuations data on private marketing agencies as of Q2 2024. We begin by providing context on the M&A environment for owners of marketing agencies, drawing from our conversations with M&A advisors as well as our own personal experience. We have previously published EBITDA Multiples by Industry, which has become a trusted resource among M&A professionals and investment banks.
The 2024 M&A Market for Marketing Agencies
In 2024, the larger trends of M&A markets impacted marketing agencies as expected. Fewer deals have closed than the industry saw in the past two years due to the higher cost of capital following rising interest rates. Agencies fall squarely into the list of sectors that have been hit by the market downturn, as they tend to rely on larger businesses’ marketing budgets. The agencies that have gotten deals done this year were serving niches that haven’t been affected as much, such as consumer staples and healthcare, or focused on mission-critical aspects of marketing, such as the creation or development of websites. There were also a minority of agencies who performed well despite the macroeconomic trends, which painted an auspicious picture to a potential acquirer.
The softening of the M&A market for agencies has mostly been seen in the number of deals made per quarter, which declined 34% for marketing agencies when comparing Q1 2022 to Q1 2024. These declines were projected to improve in mid-year following the Federal Reserve’s projection of a long-awaited interest rate cut, however the recent delay of said cut to Q3-Q4 2024 adds an extra level of uncertainty to an already cautious year.
The deals that took place weren’t seeing lower valuations, as those agencies exhibited resilience through two major events in the past three years – the pandemic-induced halting of the economy in 2020 and the market decline that began in H2 2022. Another bit of good news for agency owners is that buyers didn’t back out of deals any more than they did a year ago. PE firms and strategic acquirers care deeply about their reputations as buyers, and backing out of more than one or two deals in a decade has a significant impact on their perception in the market. So if you’re down the road on a deal, generally speaking, it is still very likely to close.
Most agencies that sold at the top end of the EBITDA multiple range (8-12x) had 3 years of double-digit top line growth, low customer concentration, and customer lifespans significantly higher than average (6.2 months). They were also represented by M&A advisory firms, which tend to have a good understanding of the landscape of acquirers and help negotiate the final deal.
| Related: See our 2024 report on the Top M&A Advisory Firms in the US. |
The best outcomes for marketing agency owners are nearly always tied to a formal deal process that brings multiple potential acquirers to the table. A surprising number of deals on the low end of the spectrum occur when agency owners respond to cold outreach from PE firms and don’t hire an advisor.
EBITDA Multiples for Private Marketing Agencies – 2024
The following table contains the average EBITDA multiples being paid for marketing agencies in 2024, segmented by company type and EBITDA range.
EBITDA Multiples for Marketing Agencies | |||
| Company Type | EBITDA Range | ||
| $1-3 M | $3-5M | $5-10M | |
| Digital Marketing | 4.8x | 6x | 9.1x |
| Growth Marketing | 5.2x | 6.9x | 10.1x |
| Performance Marketing | 5.1x | 6.4x | 9.3x |
| Creative Marketing | 4.7x | 6.8x | 8.2x |
| Social Media Marketing | 5.4x | 7x | 9.2x |
| Advertising | 5.6x | 7.7x | 9.6x |
| Account-Based Marketing | 5.6x | 7.7x | 10.7x |
| Personal Reputation | 4.5x | 6.5x | 8.1x |
| Branding | 4.6x | 6.6x | 9x |
| Traditional Marketing | 5.1x | 8.1x | 10.5x |
Selling a Marketing Agency in 2024
Although it’s the industry standard for M&A deals, EBITDA multiples aren’t the only way that acquirers are valuing agencies. For instance, on the lower end of the EBITDA spectrum, Seller’s Discretionary Earnings (SDE) is somewhat common. Sometimes, an M&A advisor will proactively put forward other valuation models in order to get a better valuation.
If you have any questions, I’m happy to speak. I’m the owner of an agency and have sold several businesses to both private equity and strategic buyers. You can email me using the address below or through this website.
