Marketing Agency EBITDA Multiples & Valuations – 2023

This report aggregates EBITDA multiples and valuations data on marketing agencies as of Q1 2023. 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 2023 M&A Market for Marketing Agencies

In 2023, the larger trends of M&A markets are impacting marketing agencies as expected. Fewer deals are closing 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 are able to get deals done now are serving niches that haven’t been affected as much, such as consumer staples and, to some extent, healthcare. There are also a minority of agencies who have performed well despite the macroeconomic trends, which paints 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 almost 50% for marketing agencies when comparing Q1 2022 to Q1 2023. There are fewer prospective buyers bidding on any given company, which also affects valuation. 

The deals that are taking place aren’t seeing lower valuations, as these agencies have exhibited resilience through two major events in the past three years – the pandemic-induced halting of the economy in 2020 and the market decline of the second half of 2022. Another bit of good news for agency owners is that buyers aren’t backing out of deals any more than they were 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 sell for the top end of the EBITDA multiple range (8-12) are represented by M&A advisory firms, which tend to have a good understanding of the landscape of acquirers and help negotiate the final deal.

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 Marketing Agencies

The following table contains the average EBITDA multiples being paid for marketing agencies in 2023, segmented by company type and EBITDA range.

Selling a Marketing Agency in 2023

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.

Evan Bailyn

Evan Bailyn is a bestselling author and award-winning speaker on the subjects of SEO and thought leadership. Contact Evan here.