Valuation guide
PR and communications agency valuation
PR and communications agencies are often retainer-led businesses built on relationships. Buyers like the visibility that retainers bring and look closely at how secure those relationships are, and with whom they sit.
Business model characteristics
Most PR and communications agencies earn a large share of their revenue from monthly retainers, supplemented by project work such as launches, campaigns and crisis support. Retainers give forward visibility, but their value depends on notice periods, the age of the relationship and whether the scope has grown or shrunk over time.
The business is people-led. Clients buy senior counsel and the relationships their account leads hold with media, influencers and stakeholders. That makes the distribution of client relationships across the team one of the first things a buyer will examine.
Value considerations
- Retainer quality. The proportion of revenue on retainer, average retainer length, notice periods and the history of renewals and reductions.
- Relationship concentration. Both client concentration and the concentration of relationships with individual account leads. A business where one person holds the top three clients carries obvious risk.
- Specialism. Sector or discipline focus, such as corporate, consumer, technology, healthcare or public affairs, is often what makes an agency attractive to a particular buyer.
- Integration with other disciplines. Content, social, digital and influencer capability are increasingly bought alongside PR. Agencies that have built these capabilities credibly tend to be read as more durable.
- Margin and senior time. Whether senior people's time is priced into retainers properly, and whether margin holds as the agency grows.
- Talent retention. Staff turnover, particularly at account-director level and above, and the incentives in place.
Questions a buyer may explore
- What proportion of revenue is on retainer, and what are the notice terms?
- Which account leads hold the largest client relationships, and how long have they been with the agency?
- How has scope changed on the top ten retainers over the last three years?
- What proportion of new business comes through referrals, and from whom?
- How much of the founders' time is spent on client work instead of running the business?
- Are there conflicts or sector restrictions that would affect a buyer's existing clients?
Preparation points
- Build a retainer schedule showing client, start date, monthly fee, notice period and scope changes.
- Map client relationships to account leads and address single points of dependence where possible.
- Record staff tenure and turnover, and the retention arrangements for senior people.
- Document the agency's specialism and the evidence for it, including the clients and work that demonstrate it.
- Prepare a clear view of normalised EBITDA, including the treatment of founder remuneration.
Frequently asked questions
Are retainers always valued more highly than project work?
Retainers generally give buyers more confidence, but short notice periods or relationships that depend on one individual reduce that confidence. Quality and security matter as much as the label.
Does a conflict with a buyer's existing client end the conversation?
Not necessarily, but it needs to be identified early. Conflicts can affect which buyers are approached and how the combined business would operate.
How do buyers view public affairs or crisis work?
As valuable specialisms with their own dynamics. Crisis work in particular can be lumpy, so buyers will look at how it has contributed over several years, not one.
Related resources
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