THE SHORT ANSWER
Value an agency using supported continuing earnings from actual service fees, with client advertising budgets and remaining delivery obligations treated separately. Define retainer/project scope, client cohorts, permanent staff and creative/account rights before selecting comparable evidence. No universal agency multiple, margin, retainer percentage or retention target is substantiated here; recurring invoices and client count do not independently determine price.
Define fees, service scope and comparable evidence
SBA describes income, market and asset valuation approaches.
(SBA: closing or selling a business)Seek actual completed evidence matched for agency services, earnings measure, size, client terms, permanent delivery and included rights. Asking prices, an unsupported EBITDA range and generic professional-service figures are separate from a company appraisal. Record missing matched evidence rather than inventing a universal agency multiple.
Reconcile retainer, project and creative fees with actual completed scope and collections. Identify client ad spending, platform payments, pass-throughs, refundable amounts and unperformed duties separately with the accountant. Document consistent accounts and presentation; gross campaign spend and large prepaid retainers are separate from supported earned company income.
Test a defined client-service cost group
Review actual delivery labor, contractor work, subscriptions, refunds and account-management duties by client/service group. The following assumptions isolate only specified amounts; they do not establish a margin or accounting presentation.
| Hypothetical completed-service group | Assumed amount | Boundary |
|---|---|---|
| Collected agency fees after refunds | 30,000 dollars | Client advertising budgets excluded |
| Distinct delivery labor | 14,000 dollars | Not already deducted |
| Distinct contractor services | 4,000 dollars | Separate stated amount |
| Distinct delivery software | 2,000 dollars | Separate stated amount |
| After specified costs | 30,000 − 14,000 − 4,000 − 2,000 = 10,000 dollars | Before account management and other costs |
The 10,000-dollar remainder follows 20,000 dollars of specified costs. Account leadership, sales, management, premises, insurance, administration, other duties, financing and taxes are excluded. It is not SDE, annual profit, an industry margin or company value.
Test actual cohorts and continuing staffing
Define the period and opening client cohort before reporting retention. Separate client-count continuation from fee continuation, expansions, contractions and new accounts. Identify service scope, termination, disputes and departure reasons; new wins can conceal lost opening-client fees. Do not use a fixed client-count or revenue-share threshold as a universal valuation test.
Use the earnings reconciliation for continuing delivery, account management, strategy, creative, sales, software, administration and owner replacement. Map permanent people through the coverage worksheet. A recurring invoice may require recurring delivery work. Do not remove ordinary contractor costs or founder duties merely to make the earnings measure more attractive.
Keep client rights and unfinished duties in scope
FTC guidance addresses necessary access and secure personal-information handling.
(FTC: protecting personal information in business)Have counsel and technical professionals review actual client/account data rights, approved access, retention and transfer conditions. Use the consent register for client, platform, contractor, software and IP/creative rights. An account login or showcase portfolio does not independently establish sale ownership, lawful disclosure or automatic client continuation.
Allocate client budgets, prepaid service, unfinished milestones, ad commitments, contractor bills, refunds and disputes through the delivery guide. Compare actual supported earnings, permanent costs, necessary migration and funded duties. Treat any contingent proceeds or continuing seller work separately from closing cash rather than promising a preparation-driven premium.
Owner questions
Which agency valuation range is verified here?
No universal agency range is substantiated; obtain actual matched completed evidence with a defined fee, earnings and rights scope.
Is the 10,000-dollar example EBITDA?
It is only a balance after three assumed costs, before account management, sales, premises and other expenses.
Does a retainer percentage prove revenue quality?
Test actual client/cohort continuation, contract choice, delivery duties, collection and continuing costs.
Sources and review scope
Source review completed . The sources below support the identified concepts or rules; they do not validate hypothetical amounts or a valuation of your business.
- SBA: closing or selling a business
Valuation approaches, sale agreements, assets and ownership transfer.
- FTC: protecting personal information in business
Information inventory, necessary access, authentication, encryption, service-provider oversight, retention and incident planning. General security guidance; not an M&A privacy-law compliance certification.
Confirm tax, legal, accounting and lending applications with the relevant professionals. Historical market observations describe the stated period and reported sample.
This is educational material. Industry figures and program rules can change; check the original sources and your advisors before applying them to a transaction. Calculator scenarios are not appraisals, lending decisions, or offers.
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