Who decides how much your agency is worth?

Valuations given to you by brokers, accountants or others are indicative only. The hard truth is; the value of your agency is what a buyer will pay. Luckily, we can influence that.

Creative agency valuation is science and art

Most agency founders overvalue their business by 20-40%. Not from delusion, but from emotion. They've sacrificed safe jobs, sleep and sanity to build. Of course it feels like it should be worth more.

Last week, a founder told me their agency was worth £6 million. They'd calculated seven times EBITDA, maybe more with the right buyer and synergies factored in. They'd read the trade press, seen the headlines, talked to brokers.

The reality? £4 million in today's market. Perhaps £4.5 million on a strong day, assuming everything checks out in due diligence.

This happens all the time. Brokers inflate expectations to win mandates, charging large fees to chase valuations the market will never reach. Sales languish or simply never happen. Running a sale process takes both time and money and you get one shot at it in any 36 month period.

When I was active in my last buy-and-build, I dreaded meeting founders represented by the wrong advisers. Their expectations on price, structure and terms were consistently unrealistic.

The Mythology of Multiples

Almost every founder has heard stories of seven or eight times EBITDA exits. These stories spread at events, usually over the third drink. They're exciting, they're aspirational, they create dangerous mythology.

What gets left out:

• The deal included earnouts that haven't paid out yet (or won't)

• EBITDA was "normalised" by adding back costs that weren't genuine one-offs

• The founder stayed on for three years at below-market salary (effectively reducing the multiple)

• The headline number included property transactions or other fixed assets

• The buyer identified something unique they simply had to own

• Occasionally, the story isn't true

Big multiples do happen. But they require near-perfect conditions: impeccable financials, competing buyers, flawless due diligence and a structure that allows earnout collection.

Current example: I'm involved in a process with an excellent creative agency. Average EBITDA of £1 million after adjustments, high retained income, prestigious client list in their niche, £150k+ per head in fee income, 25% EBITDA margins, no concentration risk, exceptional retention. They score nine out of ten on five of seven core value drivers.

The best offer in this market? 5x.

In current market conditions, that's solid. Yet agencies with weaker fundamentals regularly tell me they're worth 7x or 8x.

The harsh reality: buyers decide value. Not you, not your broker, not your accountant. The market speaks.

What Buyers Actually Pay For

Buyers don't pay for vision, awards, creative culture, potential synergies, or unrealised benefits. These things matter and impact value, but they aren't what they pat for. They don't even really pay for your current or averaged EBITDA figure.

They pay for predictable, sustainable, profitable cash flow. Either to plug into existing operations or use as a platform for further acquisitions.

Everything else is supporting evidence.

Price reflects the buyer's confidence in your ability to generate future cash. They calculate multiples using objective criteria that risk-score future cash flow. High risk equals low multiple. Low risk earns higher multiples.

Four Critical Questions

A great place to start is by asking yourself some searching questions and to answer them honestly. Here are just four from a much longer list that helps look at risk versus reward from a bias point of view.

1. How much revenue is contracted beyond 12 months? If the answer is "not much", buyers discount for risk. They pay premiums for certainty. Short-term contracts or project-based work reduces your multiple.

2. How dependent is your business on you personally? If you're the rainmaker, the relationship holder, the creative genius everyone wants, your business might even not be sellable. Brilliant founders sometimes create well-paid jobs rather than businesses. When they leave (the point of selling), value walks out with them. Buyers see this coming.

3. What happens if your top three clients leave tomorrow? Client concentration is the biggest value-killer I see. If over 25% of revenue comes from your top three clients, or over 15% from one client, expect heavy discounting. Over 40% from your top three? You'll have serious conversations about whether you're sellable at all.

4. Is your EBITDA actually your EBITDA? This is where I see well-meaning but unhelpful creative accounting. The founder's spouse on £60k for two days monthly of bookkeeping. Car leases unrelated to business. "One-off" costs that happen annually. Buyers' accountants forensically examine numbers. Every adjustment comes straight off your price.

Current Market Multiples

It's probably foolish of me to commit multiples in writing, but at the time I put this blog together (early February 2026) this is what I'm seeing in the UK market. It's worth saying that multiples in the United States tend to be a little bit lower. It's a much bigger market and there is a lot more deal flow there, which tends to favour buyers.

Under £1m EBITDA: 3.0x - 4.5x. Often part-cash, part-earnout because buyers are nervous about small businesses.

£1m - 2m EBITDA: 4.0x - 7.0x with good client diversity, contracted revenue and management team that can operate without you.

Over £3m EBITDA: 6.0x - 8.0x, sometimes more in hot sectors (currently tech marketing, employer brand, influencer marketing, B2B demand gen and tech-led GTM) or with genuinely defensible IP.

These are headline multiples. Actual cash received depends on deal structure, working capital adjustments, debt payoff and seventeen other factors lawyers and accountants will argue about for weeks.

Valuation Reality Check

Take your agency's EBITDA for last financial year. Answer honestly:

1. Did you pay yourself market-rate salary, or underpay to boost profit?

2. Are there "one-off" costs that actually happen every year?

3. If you left tomorrow, would revenue stay flat for 12 months or decrease?

4. Could you lose your biggest client and still be profitable?

5. Is your growth rate accelerating, are you flatlining or is it up and down?

If you answered unfavourably to more than two, your agency is worth less than the headline multiple. Possibly significantly less.

Honesty at the start saves time, money and heartbreak later. It also allows you to get ahead of the game by changing those things in your business which might look like risk to a buyer and therefore diminish value. I was speaking to the owner of one of the agencies I bought on my last buy and build. She wished she could do it again, but this time should start building value three years out from the sale. It was clear to her what buyers like me valued and it was also clear to her that she could've built these into the DNA of her agency.

What To Do Next

Get a proper valuation. Not a calculator. Not a broker's guide price. A proper valuation from someone who knows your sector, telling you:

• What your business might worth today and why

• What it could be worth in 24-36 months

• Specifically what's holding valuation back

• Realistic timeline to fix each issue

Expect to pay around £5k. It's the best money you'll spend.

Stop googling multiples. Every hour spent on "agency valuation calculator" is wasted. Your business is unique. The market is specific. Get proper advice or make a decision based on imperfect information, but stop paralysing yourself with internet research.

Once you know the real number, you can make informed choice.