B2B/B2C Digital Marketing Comps
March 23, 2023
by a searcher from The University of Michigan - Stephen M. Ross School of Business in Columbus, OH, USA
We're evaluating some B2B and B2C digital marketing companies (predominantly SEO, PPC, & Social) and are wondering if anyone has recent (last 6-months) comps to compare against? We're keeping our focus in the $75ok to $1.25m EBITDA range...
from Northeastern University in New York, NY, USA
We typically see the following multiples: 2-4x EBITDA for agencies profiting under $1M 3-6x EBITDA for agencies profiting between $1-2M 6-9x EBITDA for agencies profiting between $2-5M 8-10x EBITDA for agencies profiting above $5M We have seen a bit of multiple compression, but mostly on the upper end of the market >$3M in EBITDA. Smaller agencies are continuing to see multiples in the 2-6x range. We also take into account various other factors when valuing agencies, including (but not limited to)... % of project vs retainer revenue generalist agency vs niche long-term vs short-term contracts client concentration
Performance-based (SEO, PPC, etc), social media, content marketing, and some PR agencies typically have higher levels of recurring revenue than web development or purely creative/production agencies. With those agencies, we see higher multiples and much greater interest in the market.
👉👉👉 I would keep in mind this is based on EBITDA and most smaller agencies live in the SDE world. I aim for less than 2X when dealing with any non-professional, owner operated agencies, which tend to dominate the sub $1M mark!
from Northwestern University in Chicago, IL, USA
I'm in closing to buy a smaller firm ($250k SDE) at 2.7x SDE right now. I've seen some sellers asking for 5x on trailing 12 months SDE (which I think is insane) but most have no idea how to value themselves, so we're setting the benchmarks.
Happy to talk more next month after the deal is officially in the books.