Every agency gets valued twice.

Once by the founder, usually late at night, usually generously. And once by the buyer, in a spreadsheet, by someone who does this for a living.

Only one of those valuations ends up on the completion statement.

The gap between the two is not bad luck. It is the price of finding out too late. And the strange thing is that almost everything a buyer will hold against you is visible from where you're sitting right now, two or three years before you ever open a data room.

Due diligence is not a discovery process. It's a pricing process.

Founders tend to treat diligence as an exam. Get the documents in order, answer the questions, pass.

That is not what is happening. By the time a buyer is deep in your numbers, they have already decided they want the business. What they are doing now is working out how little they can pay for it, and how much of the payment they can make conditional on you sticking around to fix the problems they've just found.

So every issue they uncover does two jobs. It pulls down the multiple. And it pushes more of the consideration into an earn out.

That second part is the one founders underestimate. A softer multiple is painful but honest. A restructured deal means you have sold your agency and then spent three more years working for it, on someone else's terms, with the money you thought you'd banked now hanging on targets set in a room where you had no leverage.

The list is shorter than you think

After enough deals, the findings start to repeat. Buyers are not looking for a hundred things. They are looking for about ten, and they know exactly what each one is worth.

Client concentration. One client at 30 percent of revenue is not a client, it is a condition attached to your business. Buyers model what happens when it leaves, because at some point it will.

Founder dependency. If the relationships, the pitches and the creative judgement all run through you, the buyer is not acquiring an agency. They are acquiring a person, temporarily. That is what earn outs are for.

An unpredictable pipeline. Not the size of it, the rhythm of it. Referrals and good fortune are lovely to live on and impossible to underwrite. A buyer will pay for demand they can forecast.

Vague positioning. Full service, integrated, ideas led. If you sit in the same box as four hundred other agencies, you get valued like them. Positioning is the lever that quietly moves every other number on the page.

Margin. A healthy independent should be running a net margin around 25 percent. Below 15 and the conversation changes from what is this worth to what will it cost to fix.

Cash and aged debt. Profit you cannot collect is a story, not an asset. Debtor days stretching past 60 tell a buyer something about how you run the business, and about how your clients regard you.

No owned IP. Everything you sell is time. Time does not scale, does not compound, and does not carry a premium multiple.

A thin layer below you. No second tier leadership means no succession, which means no business without you, which means back to founder dependency.

Messy paper. Contracts that auto-renew on nothing, rolling engagements with no notice terms, freelancers who look like employees, IP you never formally assigned. None of it is fatal. All of it is chargeable.

No equity or exit structure. Cap tables with old friends on them, option promises made verbally, share classes nobody has looked at since 2011.

You know which of these apply to you. You probably knew before you finished reading the list.

What it actually costs

Take an agency doing £8m in revenue at a £1.2m EBITDA.

At six times, that's £7.2m. At four times, it's £4.8m. The agency is identical. The difference is entirely down to what the buyer found and how confident they feel about next year without you in it.

Now apply structure. A clean business might see 60 percent of that paid at completion. A dependent one might see 40 percent, with the rest spread over three years against targets. So the founder of the first agency walks away with over £4m in the bank. The founder of the second walks away with under £2m and a three year job.

Same revenue. Same team. Same work on the website.

No one wants that three year job. And it rarely ends well. It's nearly half an economic cycle. Things change, and you're no longer in charge.

Value is built one to two years out, not two months out

Here is the part that catches people.

A buyer does not read your current trading. They read your last two or three years of accounts, because that is the only evidence they have that the business does this consistently rather than did it once.

Which means the work that changes your exit value has to happen long before you decide to sell. Fixing client concentration takes eighteen months of deliberate new business. Getting off the founder takes a year of moving relationships and holding your nerve while someone else runs the meeting. Margin repair takes a full cycle of repricing and rescoping.

None of that can be done in a data room. By then, all you can do is explain.

The founders who exit well are not the ones who negotiated hardest. They are the ones who started acting like a buyer two years early.

That said, getting the right person on your side when you're selling can drastically improve your deal. I've been in this situation many times. In 2024 I was asked to help with an exit framework. I told the seller I would at least 20X my own fees, in sale value. I usually charge between £10 and £20k to help on deal support. For this one, I charged under ten. And the seller made another, wait for it, £1 Million.

So, either you plan early to get your value up, or get support before it's too late when you're in the sales process. Ideally both. Not everyone tries to take a percentage.

Score yourself the way you'll be scored

The uncomfortable, useful move is to sit down and grade your own agency against the same criteria a buyer will use. Not a gut feel. An actual score, with thresholds, that tells you where you are weak and in what order to fix it.

I have a system called Ten Levers™ - ten levers of agency value, five statements each, scored honestly. Positioning. Demand Engine. Commercial Model. Client Quality. Org Design. Delivery Economics. Financial Grip. Leadership and Culture. Owned IP. Equity and Exit Readiness.

It takes about twenty minutes. If you'd like to take the diagnostic, it's FREE, drop me a line.

It will tell you, before anyone else does, what your agency is really worth in terms of what a buyer sees, and which levers are costing you the most.

You are going to get this feedback either way. The only question is whether you get it while you can still do something about it, or across a table from someone who is using it to reprice your life's work.

That is the Bold Move. Go and find the bad news yourself.

FAQs

How long before selling should I start preparing my agency?

Two to three years. Buyers assess trading history, not current performance, so the improvements that move your valuation need to show up in filed accounts before you go to market.

What reduces an agency's valuation the most?

Client concentration and founder dependency, consistently. Both raise the same question for a buyer: what is left if this goes away? Weak positioning and sub-15 percent margins follow closely behind.

What multiple do independent agencies sell for?

Most sit in a band of roughly four to eight times EBITDA. Where you land inside that band is decided by the risk factors above, and by whether what you sell is differentiated or interchangeable.

Can I improve my agency's value quickly?

Some levers move fast, pricing and delivery economics among them. Others, like reducing client concentration or building a second tier of leadership, take a year or more. Start with whichever is costing you most.