A UK marketing agency is usually valued as a multiple of its adjusted annual profit (EBITDA). The multiple is higher when most revenue is recurring retainers, no client exceeds a large share of income, margins are healthy and the agency can run without its founder.
Start with adjusted profit
Valuation starts from EBITDA, adjusted to remove one-off and personal costs and to add a market-rate salary for the owner if they are not paid one. This is the profit a buyer would actually inherit.
What raises the multiple
Recurring retainer revenue, multi-year client relationships, a spread of clients across sectors, documented processes, a capable second tier of management, and growth in the last two years.
What lowers the multiple
Project-only revenue, one or two clients making up most income, the founder holding every relationship, declining revenue, or contracts that end on change of ownership.
Revenue mix matters more than size
A smaller agency with dependable retainers often attracts a better multiple than a larger one living on one-off projects, because the buyer is paying for predictable future profit.
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