How Agency M&A is Shifting As Many Buyers Reward Margin Discipline Over Topline Growth

Agency valuations have grown up. Buyers are no longer chasing topline growth for its own sake. They’re scrutinizing margin discipline, operational rigor, and EBITDA, and rewarding agencies that run tight, measurable businesses. In this market, rising profitability can matter more than rising revenue when deals get done.

Lori Murphree, Founder and Managing Partner of M&A advisory firm Evalla Advisors, has spent more than two decades inside agency dealmaking, advising founders on what actually drives outcomes. With experience across investment banking and transactions like the 2024 OKRP–Barkley merger, she sees the gap clearly between agencies that command premium valuations and those that stall. That gap, she says, increasingly comes down to how well the business is run, measured, and prepared long before a sale is on the table.

"Agencies used to be rewarded for getting bigger. Now they’re rewarded for getting better. If EBITDA isn’t climbing and operations aren’t disciplined, growth alone won’t save the deal," says Murphree. Today, agencies are valued for disciplined operations and measurable performance, not simply for their size. Buyers are looking for leaders who use operational rigor and AI-driven efficiency to deliver results and measurable profitability.

• Don't be SaaSy: Agencies are now expected to run at a different level of profitability, with buyers increasingly treating 30 percent EBITDA margins as the new baseline rather than a stretch goal. "If an agency is under 20 percent, that’s a problem now, and AI only matters if it shows up in higher margins and real efficiency," Murphree says, adding that service firms should not pitch themselves like SaaS companies unless their technology is genuinely differentiated. "Using AI like everyone else is table stakes, but being first in a category or doing something no one can easily replicate is what actually changes how value is perceived."

Private equity’s entry into the agency M&A market has enabled mid-sized agencies to grow, professionalize operations, and acquire others while retaining identity. That has created a new class of buyers for smaller firms and made the idea of a sale feel less abstract and more like a repeatable, achievable outcome for agency owners.

• Retirement envy: As agency deals become more visible, founders are no longer guessing at outcomes. They’re watching peers navigate acquisitions, preserve culture, and achieve real financial security, which is reshaping expectations across the market. "When owners see someone like them sell a strong creative agency and actually secure their family’s future, it reframes what’s possible and makes M&A feel achievable rather than abstract," Murphree says.

• Succession as strategy: Owners often assume a sale will send employees running, but in practice the opposite frequently happens when the deal is structured well. "In a small agency there’s a ceiling on career growth, and an M&A transaction can remove that ceiling by creating new leadership paths and succession opportunities," Murphree says, pointing to the OKRP–Barkley merger where a prepared second team enabled a smooth transition with the CCO stepping into the CEO role as planned.

• Messiness & Accounting: The strongest M&A stories focus on what owners can actually control long before a deal is on the table. "Messy financials kill deals every time, and if you’re not on accrual accounting it’s always an issue," Murphree says, adding that execution matters just as much at the finish line. "A good, efficient lawyer can keep momentum and get a deal done, while the wrong one can drag it out until it falls apart."

Timing can influence outcomes, but preparation determines them. The agencies that exit well are built to withstand scrutiny at any moment, with clean financials, credible leadership plans, and advisors in place before opportunity knocks. "The biggest mistake founders make is waiting until they want to sell to start preparing," Murphree concludes. "The ones who talk to the right people early give themselves options, leverage, and far better outcomes when the moment arrives."