You want to sell your advertising and communications agency? Then it's good to know what the takeover market in the field of advertising and communications companies looks like.
2016 is still the top year for mergers and acquisitions in the advertising and communications industry. Those who nowadays put themselves in the spotlight as advertising and communications agencies as independent agencies are quickly becoming attractive acquisition targets for mainly foreign superpowers.
There are many ways to value a business. A common method of expressing the value of a business is "a factor x gross annual profit." This factor is also called multiple and another designation for gross annual profit is EBITDA (Earnings Before Interest Taxes Depreciation and Amortization).
For the media, advertising and communications sector - which includes advertising and communications agencies - an indicative EBITDA multiple range of 3.3 to 4.0 is currently used, according to the Brookz Takeover Barometer. The average EBITDA multiple across all SME sectors is 4.90.
The valuation of a business is often the starting point for negotiations between buyer and seller. The outcome of these negotiations is the final sales price. So valuation and price are two different quantities. Besides valuation, the price is also determined by possible scarcity in the market, bargaining power of the parties, the strategic value of the business for the buyer and possible synergy effects for the buyer (cost savings, purchasing advantages).
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Want to buy a business or sell a business in the Media, Advertising & Communications sector? With this Brookz Sector Monitor, we want to present buyers and sellers with facts, figures and an outlook that provide insight into the number of transactions, the value development of businesses and the latest trends and developments in Media, Advertising & Communications. Because in any buying or selling process, thorough preparation provides peace of mind, overview and structure.
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In both the short and long term, Rabobank does not expect growth in media spending, the key driver for advertising and communications agencies. Although, according to research firm Nielsen, online is growing substantially, this growth is completely offset by the contraction of other media spending. Meanwhile, the online advertising market is larger than the offline advertising market.
In figures, the number of advertising and communications agencies in 2024 looked as follows(CBS):
With this online training from Brookz you are optimally prepared to largely sell your business yourself: 25 Powerpoint videos, a comprehensive valuation report, legal model contracts, handy templates, checklists and expert support. Plus 50% discount on listing your business on Brookz!
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A number of trends and developments will inevitably cause changes over the next few years, but also offer advertising and communications agencies many growth and acquisition opportunities:
For advertising agencies, it is essential to have knowledge of sustainability and related marketing strategies, according to Rabobank. A green business is a good start, as it also makes the service for sustainable clients attractive.
By using big data, businesses can better serve their clients, better understand customer groups and approach them more efficiently. Focusing solely on conversion rates, for example, is no longer good enough. This is an opportunity for advertising and communications agencies with the right (IT) expertise.
The shift to online as the main advertising channel requires new competencies. In addition to IT businesses, marketing agencies are also struggling to attract the right specialists. For advertising and communication agencies, it is now important to encourage retraining programs to become IT specialists even more emphatically. By doing so, part of the large number of open vacancies can be filled.
Advertising and communications agencies and its clients are being challenged on their role in social problems. Advertisements for alcohol, soft drinks, potato chips and confectionery, fashion and cosmetics, for example, are seen as partly responsible for alcohol abuse, (childhood) obesity and anorexia. Advertising and communication agencies will have to be selective in their customer acquisition and pay attention to reputation management based on this.
