How to value a local communications agency?
Introduction
A local communications agency is not valued like an industrial company or a retail business. Its main asset? Client relationships, team skills and the ability to generate recurring revenue. Unlike national agencies that focus on volume, local agencies build their value on proximity, knowledge of the regional economic fabric and client loyalty.
For a seller, understanding the valuation levers enables preparation for the transfer under the best conditions. For a buyer, analysing these criteria avoids overpaying or overlooking structural risks. The question is not only "how much is this agency worth?", but above all "what is this value based on and how can it be maintained after the acquisition?"
This guide details the specificities of a local communications agency, the elements to analyse in the client portfolio, suitable valuation methods and the factors that influence the sale price. Tools such as the online valuation provide an initial estimate, but an in-depth analysis remains essential to secure the transaction.
📌 Summary (TL;DR)
The valuation of a local communications agency rests on client portfolio quality, the share of recurring contracts, internal skills and dependence on the founder. Classic methods (EBITDA multiple, DCF) apply, but must be adjusted according to revenue stability and client relationship transferability. Key factors: portfolio diversification, process automation and know-how documentation.
📚 Table of contents
The specificities of a local communications agency
A local communications agency is distinguished by its strong territorial roots. It works primarily with regional SMEs, local businesses and local institutions. This geographical proximity creates client relationships often based on personal trust and word-of-mouth.
The services offered are generally personalised: social media management, content creation, visual identity, local events. Unlike large agencies, the volume of projects is more modest but client loyalty can be high.
These characteristics directly influence the valuation. Dependence on the founder's personal relationships, the size of the local market and the recurrence of mandates are determining factors in assessing the value of the communications agency.
Analysing the client portfolio
The client portfolio constitutes the main asset of a communications agency. Several indicators enable assessment of its solidity and potential during an acquisition.
The retention rate measures loyalty: a rate above 80% over 3 years indicates a stable client base. The average duration of client relationships reveals service quality and revenue predictability.
Client concentration represents a major risk. If a single client generates more than 30% of turnover, the loss of that client would threaten the company's viability. Balanced diversification significantly increases value.
The mix between recurring contracts and one-off mandates determines revenue predictability. Strong loyalty models create superior value, as explained in our guide on client loyalty.
Recurring contracts vs one-off mandates
Recurring contracts (monthly retainer, management subscriptions) represent an agency's black gold. They guarantee predictable income and facilitate resource planning. A retainer client at 2,000 CHF/month generates 24,000 CHF guaranteed annually.
One-off mandates (website creation, single campaign) offer less visibility. They require constant prospecting and create turnover volatility.
An agency with 60% recurring revenue will typically be worth 40-50% more than an agency with 20% recurrence, with equal turnover. This ratio directly influences the valuation multiples applied.
Assessing internal assets and skills
Beyond turnover, several assets make up an agency's real value. The team constitutes the first asset: technical skills (graphic design, copywriting, digital strategy), operational autonomy and ability to function without the founder.
Tools and licences (Adobe software, management platforms, databases) represent tangible capital. Documented processes (templates, methodologies, workflows) facilitate transfer and reduce acquisition risk.
Local reputation and the portfolio of achievements create intangible capital that is difficult to quantify but essential. A strong digital presence (website, social media, client reviews) demonstrates credibility and facilitates new client acquisition post-transfer.
Suitable valuation methods
Several approaches enable valuation of a local communications agency. The EBITDA multiple remains the most common method: for local agencies, the typical range is between 2x and 4x EBITDA. An EBITDA of 100,000 CHF values the agency between 200,000 and 400,000 CHF.
The asset-based method assesses tangible assets (equipment, cash) and intangible assets (client portfolio, reputation). It suits small structures with little recurrence.
Valuation based on recurring revenue applies a specific multiple (often 1x to 2x annual recurring revenue) for agencies with strong contractual recurrence.
For an initial estimate, the Leez valuation tool provides an indicative range based on your financial data.
Factors that increase value
Certain elements significantly increase an agency's valuation. Sectoral diversification reduces risk: working with clients in 5-6 different sectors protects against sectoral crises.
Standardised and documented processes facilitate transfer. A comprehensive operational manual reassures buyers and accelerates integration.
An autonomous team capable of functioning without daily intervention from the founder multiplies value. Dependence on the seller represents the main risk in agency acquisitions.
A strong digital presence (optimised website, client testimonials, portfolio) and recognised specialisation (expert in local marketing, sectoral niche) create a sustainable competitive advantage.
Points of vigilance for buyers
Several risks deserve particular attention during an acquisition. Dependence on the seller's personal relationships constitutes the main danger: verify whether clients are linked to the company or to the person.
Non-transferable contracts or contracts terminable without notice weaken value. Client turnover above 30% annually signals satisfaction or quality problems.
An unstable team (high rotation, demotivation) or excessive subcontracting reduce operational control. Request collaboration histories and dependency rates on freelancers.
For thorough due diligence, the Leez expert network (fiduciaries, specialised lawyers) can support you in detailed analysis.
The valuation of a local communications agency rests on precise criteria: the quality and stability of the client portfolio, the share of recurring contracts, team skills, and the transferability of commercial relationships. Classic methods (EBITDA multiple, DCF) must be adapted to sector specificities, particularly the strong dependence on talent and reputation.
To maximise value, focus on client diversification, process formalisation, and documentation of commercial relationships. Buyers must carefully assess the risk of departure of key clients or collaborators after transfer.
Are you considering selling or acquiring a communications agency? Start with a free estimate of its value with our online valuation tool, or explore the agencies currently for sale on Leez. Our network of specialised partners can also support you in this process.
