Valuation Guide
How Much Is Your Marketing Agency Worth?
Revenue quality matters more than revenue quantity. SDE multiples range from 2.0x to 4.0x based on retainer mix, client concentration, team depth, and niche positioning.
Revenue Composition Is Your Multiple
Buyers don't just look at top-line revenue. They dissect how that revenue is earned. An agency with 80% retainer revenue at $800K is worth more than a project-based agency billing $1.2M. Here's why.
The ranking below shows how buyers value different revenue types, from most valuable to least. Where does your revenue mix fall?
Monthly Retainers
Predictable, recurring, and typically renewed automatically. Monthly retainers demonstrate deep client trust and ongoing value delivery. This is what buyers are paying for. Agencies with 70%+ retainer revenue unlock premium multiples because future cash flows are highly predictable.
Value
Highest
3.5x to 4.0x SDE
Annual Contracts
Locked-in revenue with clear visibility. Annual contracts for services like SEO management, content programs, or paid media management provide a strong revenue floor. Less liquid than monthly retainers because renewal is a single decision point, but still highly attractive to buyers.
Value
High
3.0x to 3.5x SDE
Quarterly Projects
Repeat project work with established clients on a quarterly cadence. Think seasonal campaigns, quarterly website updates, or regular brand refreshes. There is implied recurrence, but no contractual guarantee. And buyers view this as “soft recurring” revenue that requires relationship continuity.
Value
Medium
2.5x to 3.0x SDE
One-Time Projects
Website builds, brand identity packages, one-off video productions, and other project-based revenue with no expected recurrence. This is the least valuable revenue type because once completed, you must sell the next project from scratch. Agencies that rely primarily on project work face a constant sales treadmill that buyers view as high-risk.
Value
Lowest
2.0x to 2.5x SDE
Client Concentration Risk
What happens if your biggest client leaves? Buyers run this scenario in their head before making an offer. Here's how different concentration levels translate to risk.
Client concentration is the number one valuation killer for marketing agencies. If your top client represents 25% or more of revenue, your multiple takes a hit.
Top Client = 10% of Revenue
Low RiskIf this client leaves, you lose 10% of revenue. That's painful but survivable. You still have 90% of your revenue base intact and can replace the loss within 2-3 months through your sales pipeline.
Top Client = 20% of Revenue
Medium RiskLosing 20% of revenue is a significant hit that would require 4-6 months of aggressive sales to replace. Buyers notice this and start asking about the relationship depth, contract terms, and how long this client has been with you.
Top Client = 30% of Revenue
High RiskLosing 30% of revenue could mean layoffs, office downsizing, and 6-12 months of recovery. Buyers will almost certainly structure an earn-out that ties a portion of the purchase price to this client's retention for 12 months post-sale.
Top Client = 50% of Revenue
Critical RiskHalf your business is one phone call from disappearing. Most buyers won't take this risk at any price. The few who will require heavy earn-outs, seller financing, and often insist that the seller stay on for 12+ months. This isn't an agency sale; it's a job transition.
The Team Depth Question
Most agencies under $1M revenue have founders who ARE the creative director, sales lead, and strategist. That's a job, not a sellable asset. Here's how team structure maps directly to your multiple.
Each level below represents increasing operational independence from the owner. Where does your agency sit today?
Level 1
Owner Does Everything
Sales, strategy, creative, execution, billing, client management. If the owner takes a two-week vacation, the agency stops. This is a freelance practice with overhead, not a business.
Level 2
Owner + Freelancers
Owner has outsourced execution to contractors but still owns all client relationships, sales, and strategy. Slightly better because delivery continues without the owner, but there's no organizational continuity if the owner exits.
Level 3
Owner + Small W-2 Team
A team of 3-5 employees handling execution and some client communication. The owner still drives sales and key account strategy. Team members have been there 2+ years. There's real institutional knowledge in the organization now.
Level 4
Full Team + Account Managers
Dedicated account managers own client relationships. Creative team delivers independently. The owner focuses on business development and strategic direction. Clients know and trust the team, not just the founder. This is where real business value begins.
Level 5
Self-Running with Management Layer
A creative director, operations lead, and account management team run the agency day-to-day. The owner could disappear for a month and revenue wouldn't be affected. Documented processes, clear roles, and a culture that retains talent. This is a true business asset.
Key metric buyers track: employee tenure. An agency where key talent has been there 3+ years signals stability, culture, and reduced transition risk. High turnover is a red flag that suggests the agency runs on the owner's personal network, not an organizational system.
Niche vs. Generalist
Specialized Agency
Healthcare, SaaS, Fintech, Legal, etc.
- Harder for buyers to replicate from scratch
- Deeper industry referral networks
- Proprietary frameworks and compliance knowledge
- Higher switching costs for clients
- Attractive to PE roll-up strategies
20-30% multiple premium
Generalist Agency
Full-service, multi-industry clients
- Easier to start, more competition
- Value tied more to talent and relationships
- Lower client switching costs
- More fragile during ownership transitions
- Larger addressable market, but less defensible
Standard multiple range
The sweet spot is a clearly defined vertical with enough addressable market to support growth under new ownership. Hyper-niche agencies serving a single sub-industry may have a smaller buyer pool, which can offset the multiple premium.
Building Agency Value Before You Sell
Start these 12-18 months before going to market. Each step directly increases your SDE multiple.
Shift project clients to retainer agreements
Review your top 10 clients and identify which project-based relationships could become retainers. Offer a 10-15% discount on monthly rates in exchange for 6-month commitments. Even converting 3-4 clients moves the needle on your revenue composition score.
Reduce client concentration below 15%
If your top client is 25%+ of revenue, you need new client acquisition, not just more work from existing accounts. Set an internal policy: no single client above 15%. This may mean turning down upsell opportunities with your biggest client and redirecting that sales energy toward new logos.
Hire account managers and remove yourself from client work
The most impactful change you can make. When clients call your agency, they should reach their account manager, not you. Start transitioning smaller clients first and work your way up to your largest accounts over 6-9 months. Yes, you may lose one or two clients in the process. But that's a small price for a 0.5x+ increase in your multiple.
Document every process and create delivery playbooks
Write SOPs for client onboarding, project kickoffs, content creation workflows, reporting processes, and quality assurance checks. Create templates for everything. A buyer should be able to read your operations manual and understand exactly how your agency delivers results. This documentation is the difference between a 2.0x and a 3.5x multiple.
Clean up your financials and separate personal expenses
Stop running personal meals, travel, and subscriptions through the business. Separate your personal cell phone plan. If you're paying family members who don't actually work, stop now. Clean books for the last 12-18 months make due diligence faster and give buyers confidence in your numbers.
Lock in written contracts with all clients
If any of your client relationships operate on handshake agreements or expired contracts, formalize them now. Written contracts with clear scope, billing terms, and auto-renewal clauses provide the revenue certainty that buyers require. Include an assignability clause that allows the contract to transfer on ownership change.
Frequently Asked Questions
Ready to Know What Your Agency Is Worth?
A calculator gives you a ballpark number. But a professional valuation accounts for your specific revenue composition, client risk profile, team depth, and market positioning to arrive at a defensible number you can take to the negotiating table.
I work with marketing agency owners to identify every value driver, build an exit-ready business, and find the right buyer who understands what your agency is worth.