Marketing & media agencies
Price is set by how little of the revenue depends on the founder's relationships, and how much of it recurs.
Agencies are bought for their client list and sold on whether that list survives the founder. Everything a buyer does in diligence is an attempt to answer that one question, and everything worth doing in preparation is an attempt to answer it first.
Who acquires in this sector.
The buyer set determines the process. These are the parties we approach on a mandate here, and the reason each of them pays.
What moves the number, and what moves it back.
Both lists are what buyers in this sector actually examine. The first is where preparation earns its return. The second is where processes lose ground once diligence opens.
What lifts the multiple
Worth fixing twelve to twenty-four months before you go to market.
- Retained income over project workContracted fee income with notice periods is underwritten differently from work that has to be won again each quarter.
- Client tenure, and no single account carrying the yearLong relationships spread across many clients read as a business. One large account reads as a risk.
- A named second tier of client leadsBuyers want to see the people the client actually calls, and for it not to be you.
- Gross margin per delivery headThe clearest read on whether the model scales or just gets busier.
- A specialism a buyer cannot easily hireA defined channel, vertical or capability is worth more than general competence.
What gets discounted
Found in diligence if it is not addressed first, and repriced when it is found.
- Concentration in the top clientOnce one account passes roughly a fifth of revenue, structure starts replacing price.
- The founder as the relationshipIf the largest clients were won by you and are serviced by you, the buyer is acquiring a handover risk.
- Project revenue presented as retainedThis is found in week two of diligence, and it costs more than disclosing it.
- Freelance-heavy deliveryFlexible cost is attractive until it turns out the capability leaves with the contractors.
- Pass-through media inflating revenueBuyers price net revenue. Gross billings in the headline invite a correction.
How a process runs here.
Preparation is about proving the client relationships are institutional rather than personal, and doing it twelve to twenty-four months before a buyer asks. That means moving named relationships onto a second tier, converting what can be converted onto retained terms, and building a contract file that supports every revenue line before anyone sees the information memorandum.