Valuing an Advertising Agency
The advertising industry has performed well for several years. According to IBIS World, this industry generates over $14.5 billion dollars per year. In addition, businesses in the advertising industry tend to have healthy profit margins. We can expect these trends to continue in the coming years. This is due to various factors including high demand for digital advertising services. These conditions are ideal if you are looking to buy, expand, or sell an advertising agency. However, the advertising industry is fragmented and competitive. This can threaten the success of your advertising agency. To combat this, it is important to know the value of an advertising agency. This can help you understand how to strengthen your advertising agency against competitors. You can start by learning the principles of valuing an advertising agency.
There are many factors to consider when valuing an advertising agency. Whether you are buying or selling an advertising agency, it is best to receive a business valuation. During a business valuation, a business appraiser identifies the strengths and weaknesses of your advertising agency. In addition, they will calculate the fair market value of an advertising agency. With this information, you can begin to maximize the value of an advertising agency.
Peak Business Valuation is a professional business appraiser. We work with advertising agencies on a regular basis. Peak is happy to provide you with a business valuation for an advertising agency. We can also answer any questions you may have about valuing an advertising agency. Start today by scheduling a free consultation with Peak Business Valuation, business appraiser.
Additionally, check out our articles – Valuation Multiples for an Advertising Agency, How to Value an Advertising Agency, and Value Drivers for an Advertising Agency.
Market Multiples for an Advertising Agency
Below, we list average market multiples for an advertising agency. Valuation multiples are financial ratios that measure the value of an advertising agency in relation to a financial metric. These metrics typically include sales, cash flow, or earnings. Peak Business Valuation often uses market multiples when valuing an advertising agency.
- SDE Multiple Average Range: 2.22x – 3.54x
- EBITDA Multiple Average Range: 3.21x – 4.30x
- Revenue Multiple Average Range: 0.39x – 0.79x
**Disclaimer: These multiples are for educational purposes only. As such, the information provided does not constitute valuation advice. These multiples do not represent the valuation opinion of Peak Business Valuation or its valuation professionals. Instead, seek the guidance and advice of a qualified business valuation professional about any matter in this article.
How to Value an Advertising Agency
There are various valuation approaches a valuation expert uses to value an advertising agency. The market approach is a common method that uses multiples for an advertising agency. Typically, the most applicable multiples are the cash flow multiples – SDE and EBITDA. However, business appraisers will use their expertise to determine which multiples are most suitable for your advertising agency.
Understanding how to value an advertising agency is beneficial whether you are buying, expanding, or selling an advertising agency. Below, we highlight a few key success factors for an advertising agency. For more information, receive a business valuation. Peak Business Valuation, business appraiser, is happy to provide a business valuation for an advertising agency. In addition, we can discuss any questions on valuing an advertising agency. Schedule a free consultation with Peak Business Valuation below!
Key Success Factors
The following success factors can help you increase the value of an advertising agency. Keep in mind, these are only suggestions. For more specific guidance, it is best to work with a business appraiser. Peak Business Valuation is happy to help you! Reach out to Peak today to get started.
Creativity:
First, producing creative advertisements is an effective way to differentiate your agency from competitors. This requires a skilled advertising team and thorough planning. By meeting client needs in a creative way, you can increase the demand for your advertising services. This has a significant impact on the value of an advertising agency.
Client Relationships:
Next, it is important for advertising agencies to build strong client relationships. Doing so promotes steady cash flow for your advertising agency. To achieve this it is vital to provide high-quality customer service. This includes having open lines of communication, understanding client needs, being transparent with pricing, etc… By building strong client relationships, you can maximize the value of an advertising agency. Peak Business Valuation, business appraiser, is happy to discuss more on strengthening client relationships. Schedule a free consultation with Peak Business Valuation today!
Skilled Workforce:
Last, it is vital for advertising agencies to have a skilled workforce. Advertising agencies should hire individuals with extensive training and experience in advertising. Having an experienced workforce ensures that your advertising agency produces high-quality services. This can lead to an increase in sales revenue and profitability. When valuing an advertising agency, Peak Business Valuation considers your workforce.
Summary
Whether you are purchasing, expanding, or selling an advertising agency, it is beneficial to understand the principles of valuing an advertising agency. The best way to learn how to value an advertising agency is by receiving a business valuation. As part of a business valuation, a business appraiser will determine the fair market value of an advertising agency. In addition, the valuation expert may discuss the strengths and weaknesses of your advertising agency. This information can help you understand how to increase the value of an advertising agency.
Peak Business Valuation, business appraiser, works with many advertising agencies throughout the country. We are happy to provide you with a business valuation for an advertising agency. In addition, we can answer any questions you may have on valuing an advertising agency. Start now by scheduling a free consultation with Peak Business Valuation below!
