M&A activity snapshot
Agency deal volume is rising steadily, led by digital specialists. Capstone Partners reports U.S. marketing services M&A rising each year since 2023, with sector dealmaking up 7.5% year over year in 2026, and digital marketing targets accounting for 39.5% of deals. Globally, Canaccord Genuity counted 302 agency and marketing services transactions in 2025, most of them reported without a deal value.
The supply side is very fragmented. The 2023 County Business Patterns file counts 15,512 advertising agency establishments (NAICS 541810), and about 68% of them have fewer than five employees (Axia's calculation from that file).
At the top of the market, the holding companies are consolidating. Omnicom's purchase of Interpublic was valued at $13.5 billion and cleared the FTC under a consent order.
Who is buying
Strategic buyers still do most deals: Capstone reports that strategic buyers have retained the majority (68.6%) of sector deals YTD. They include networks adding capabilities, such as Stagwell's acquisition of experiential agency JetFuel in May 2025.
PE-backed platforms are the fastest-growing buyer group, with PE M&A up 17.4% YTD. Lower-middle-market examples include WILsquare Capital's OuterBox, which bought Accelerated Digital Media as WILsquare's fourth acquisition in its digital marketing platform, and Level's acquisition of BAM Strategy. New platforms are still forming: Mountaingate Capital acquired B2B agency Walker Sands from Stone-Goff Partners in October 2025.
Global context. SI Global's analysis of 1,485 transactions found PE and PE-backed businesses accounted for 30% of the agency and tech services market.
What buyers look for
Capstone says sponsors target agencies with low customer concentration, a high degree of recurring revenue, and advanced technology-enabled offerings such as AI, and that buyers want high attribution performance marketing capabilities, particularly via digital channels.
The AI question now comes first. SI Global reports that buyers have moved from asking how an agency uses AI to 'why will your business still exist in three years?' The pressure is real on the client side: Gartner's 2025 survey found 22% of CMOs say GenAI has reduced their reliance on external partners, and search-dependent services face falling clicks, with Pew measuring an 8% click rate on results pages with an AI summary versus 15% without.
What makes a strong company
Agencies that attract several bidders typically show:
- A clear specialty. Promethean Research found 84% of agencies now identify as specialists, and specialists grew 43% faster than average in 2024.
- Net margin at or above peers. The same report put the average agency net margin at 14% in 2024, against a longer-run average near 16%.
- Retainer revenue with documented renewal history, not only project work. Almost every agency offers both, so buyers look at the mix and the length of client relationships.
- No client large enough to sink the business if it leaves.
- Results a buyer can verify: attributed revenue, ROAS or pipeline numbers tied to the agency's work, and a service line that holds up as AI changes search and content production.
- Account leads and strategists who own client relationships instead of the founder.
Valuation and deal structure
Private agency prices are rarely disclosed, so the honest reference points are proxies. Canaccord's public agency group, which includes the large holding companies, traded at a median 0.8x LTM revenue and 6.6x LTM EBITDA at the end of 2025. For smaller private companies across all business services, GF Data reports an average of 6.2x TTM EBITDA in H1 2025. Neither figure is an agency-specific private-market benchmark.
Premiums go to agencies that look like growth businesses. SI Global says sellers with an AI-first strategy are commanding premium valuations, without putting a number on it. Earnouts and seller rollover equity are common tools in services deals generally, used to keep founders and key staff through the transition. The sources above do not break out how often agency deals use them, so treat that as a general pattern, not an agency-specific figure.
For a first range on your own agency, use the Axia valuation tool.
Outlook
Expect continued deal flow through 2027, weighted toward performance, data and commerce specialists. Capstone expects deal flow to be driven by buyer appetite for strong ROI, high attribution performance marketing capabilities.
Budgets are flat, which raises the bar for agencies. Gartner's 2026 survey found marketing budgets at 7.8% of company revenue, with 15.3% of marketing budgets directed toward AI. Agencies selling labor-heavy content or search work should expect harder questions about how their revenue holds up.
Part of Professional Services M&A. See also: why vertical-focused buyers outperform generalists.