In the first quarter of 2024, the landscape of mergers and acquisitions (M&A) for marketing agencies has shown a dynamic yet challenging environment. Drawing from our discussions with M&A experts and leveraging our history as a go-to source as a marketing services M&A advisory this report details the latest in EBITDA multiples and valuations of private marketing agencies.
The 2024 M&A Scene for Marketing Agencies
The year has mirrored broader M&A trends, with marketing agencies experiencing a slight downturn influenced by increased capital costs and higher interest rates as well as things like the writers strike in Hollywood and lay offs in the tech sector. Despite this, agencies focused on essential services like healthcare marketing or robust digital presence management have navigated these challenges more successfully. These niche players have attracted interest, maintaining or even increasing their market value.
As the market adjusts, a resurgence in deal activity is already underway, especially with forecasts of lowering interest rates mid-year. Agencies that demonstrated resilience during significant economic disruptions (like the 2020 pandemic and the 2022 market slump) continued to command strong valuations. Notably, committed buyers and PE firms have maintained deal closures, reinforcing their market credibility.
Top Performers in the Agency Sector
Agencies that boasted three years of strong growth, low client concentration, and extended client engagements typically saw EBITDA multiples ranging from 8x to 12x, especially where EBITDA was over $5m. Expert M&A advisory representation significantly contributed to achieving these premium valuations.
EBITDA Multiples Overview for 2024
Here’s a breakdown of the average EBITDA multiples for marketing agencies in 2024, categorized by agency type and profitability:
| EBITDA Multiples for Marketing Agencies | |||
| Agency Type | EBITDA Range | ||
| $1-3M | $3-5M | $5-10M | |
| Digital Marketing | 4.9x | 6.1x | 9x |
| Growth Marketing | 5.1x | 6.8x | 10.2x |
| Performance Marketing | 5x | 6.4x | 9.3x |
| Creative Marketing | 4.7x | 6.9x | 8.2x |
| Social Media Marketing | 5.3x | 6.9x | 9.2x |
| Advertising | 5.6x | 7.7x | 9.5x |
| Account-Based Marketing | 5.6x | 7.2x | 10.7x |
| PR & Communications | 4.4x | 6.4x | 8.1x |
| Branding | 4.7x | 6.6x | 9.1x |
| Traditional Marketing | 5.1x | 8.2x | 10.5x |
While EBITDA multiples are the norm, savvy sellers and their advisors sometimes explore alternative valuation metrics like Seller’s Discretionary Earnings (SDE) to optimize exit strategies.
For agency owners pondering a sale or seeking insights on navigating the current M&A landscape, our team at Capital A is equipped to guide you through maximizing your agency’s value and finding the right buyer. Reach out to discuss how we can assist in achieving your business objectives.
Capital A is committed to empowering marketing agency founders with insights and strategies for thriving in evolving markets. Book a call for further discussions and expert guidance tailored to your agency’s growth and success.
