Selling a media buying or advertising agency: billings, AGI, media payables and client tenure

This guide is general information about how media and advertising agency sales work, not legal, tax, accounting or financing advice. Confirm how any of it applies to your sale with your attorney or CPA, and SBA questions with the buyer's lender.

Gross billings or net revenue: which number does a buyer use?

The one that shows what you keep. FE International, an M&A advisor, tells marketing agency owners to separate pass-through media spend from fee revenue before a sale, so buyers see the true earnings base. Companies doing similar media work book it both ways in their filings.

In these filings, the line between the two is control. Omnicom books certain media buying gross where it controls the buying, contracts directly with the media vendor and takes the pricing risk. Stagwell also reports a non-GAAP net revenue that leaves out billable costs, which it says do not show how its business is performing. If your accountant books some clients gross and others net, restate them on one basis before a buyer compares your “revenue” with anyone else's.

Why are media agencies valued on agency gross income?

Because a margin on billings means little when most of the billings are media. Agency gross income (AGI) is revenue minus pass-through costs. Agency Management Institute (AMI) calls it adjusted gross income: gross billings minus cost of goods, including 1099 labor. Parakeeto, an agency profitability consultancy, counts any markup you keep on pass-through as AGI. It says leaving pass-through in revenue can throw off measures of efficiency and profit, especially at agencies that buy a lot of media.

TobinLeff, a sell-side advisor to marketing agencies, says agencies with EBITDA margins of 8% to 15% of AGI that are not growing at double digits often get only 3.5x to 5.5x EBITDA, sometimes partly in an earnout. In five of its larger deals, multiples averaged 9.81x at margins of about 35% of AGI. AMI's management target leaves 20% of AGI as profit before taxes and bonuses, after 55% on salaries and benefits and 25% on overhead. Measured against billings, that 20% shrinks:

Revenue multiples are where the gap does the most damage. Axial, drawing on Palmer and TobinLeff, says marketing agencies are generally valued on trailing-12-month adjusted EBITDA, with revenue multiples acting as a ceiling of about 1x revenue. FE International puts most digital agencies at 0.4x to 1.0x trailing revenue as a sanity check, without saying whether it means billings or revenue net of media. Converge Direct's reported revenue was about 7.8 times its gross profit, on our arithmetic, so a multiple meant for net revenue, applied to billings like those, would overstate the price several times over. The worth guide's section on AGI shows the same adjustment for every type of marketing agency.

What did Converge Direct sell for?

About 5.4 times adjusted EBITDA, on our arithmetic. It is the only media-buying agency sale in our research with a disclosed profit figure. In a February 2022 filing, Troika Media Group disclosed its agreement to buy Converge Direct, a performance marketing media-buying agency, for $125 million: $100 million in cash at closing and $25 million in Troika stock valued at $2.00 a share. The deal closed on March 22, 2022. Troika financed it with a $76.5 million term loan and filed for Chapter 11 on December 7, 2023.

Read the 5.4x with care. Converge had about 80 people and $23 million of adjusted EBITDA, far above an owner-run media agency, and its buyer was in Chapter 11 within two years of closing. It is one data point, not a benchmark. For a wider view, TobinLeff's David Tobin, as Axial paraphrased him, put service-based digital agencies close to well-run PR, integrated, advertising and creative agencies, typically 4.5x to 7x EBITDA for most midsize to smaller digital agencies. See what each type of marketing agency sells for.

How the Converge price was paid

Not all of it in cash at closing, according to Troika's 2022 annual report:

• Stock. The $25 million of stock, priced at $2.00 a share, was valued at $1.19 a share ($14.9 million), so Troika recorded the price at $114.9 million, about 5.0x adjusted EBITDA on our arithmetic.
• Holdback. Troika withheld $5.0 million of cash for working capital, to be repaid in 12 months.
• Working capital. About $4.3 million was owed to the sellers for working capital above the level set in the purchase agreement.

Troika recorded both as amounts it owed the sellers; the filings cited here do not show what the sellers finally collected. When a buyer pays partly in stock and borrows to fund the deal, ask how it is paying and what it will owe its lenders after closing. The guide to earnouts and cash at close covers how much of a marketing agency's price is usually paid later.

How do media payables and working capital change the price?

Through the working capital peg, and through what the buyer counts as debt. TobinLeff writes that most marketing agency deals are valued cash-free and debt-free. The buyer sets a working capital target, the peg, from a historical measure such as the trailing 12-month average, and the gap between the peg and what you deliver at closing changes the price dollar for dollar. If sufficient working capital is not defined before the letter of intent, TobinLeff warns, the power in the deal shifts to the buyer.

Some buyers treat year-end bonus accruals, retainers clients paid for future work and advances on media purchases as debt: they leave them out of working capital and ask you to deliver the same amount in cash. TobinLeff advises recording client advance payments as deferred revenue, a liability, not as income when the cash arrives. No source we found sets out how buyers treat media payables owed to platforms and publishers.

So settle it in the letter of intent: which media payables, client prepayments and media advances sit in working capital, which count as debt, and which months set the peg. Bring month-end figures for each, so the peg is negotiated from your numbers, not the buyer's.

Who pays the media bill if a client does not?

That depends on your contracts, and buyers will read them. Omnicom says many of its agencies buy media as agent for a disclosed principal where law and client contracts allow. In the U.S. and some other markets, many of its media contracts limit the agency's liability to media vendors until the client has paid (sequential liability). Stagwell lists acting as agent for a disclosed principal among its precautions against client credit risk.

If you place media in your own name without terms like these, you may owe the platform or publisher even when a client does not pay you. Ask counsel how your vendor terms and insertion orders read.

If you buy media as principal

Show it separately. The ANA reported in March 2026 that 58% of the client-side marketers it surveyed said their companies had used principal media, where agencies buy inventory and resell it to clients, in the past year, up from 47% in its 2024 study. Of the 114 marketers at ANA member companies surveyed, 90% questioned whether principal media recommendations are in their best interest. Give a buyer your principal line with its own margin, apart from fee and commission work, so each is priced on its own terms.

What happens to ad accounts and partner badges in a sale?

On Google, each client should already have its own account: Google's third-party policy requires a separate Google Ads account for each end-advertiser an agency manages. If you charge a management fee separate from Google Ads costs, you must tell new customers in writing before each first purchase and show the fee on every invoice. Where Google's terms call for a monthly performance report, cost must be the exact amount Google charged, and you must give customers their Google Ads customer IDs on request. A buyer can check all of this in diligence, so check it first.

On Meta, a business relates to an ad account as its owner or as an agency, according to Meta's developer documentation. Claiming an account is a one-time step, after which only that Business Manager can manage it, and most marketing companies request access to client accounts instead. An owner cannot remove a confirmed ad account from its business; an agency can. The page does not say who owns an account under your client contract, so read each contract.

Partner badges rest on your people and your clients' spend, so if a buyer is paying for one, plan to keep the certified staff and linked client accounts in place through closing. Google checks its Partner requirements daily, and its help page does not cover a change of ownership.

How do buyers judge client tenure at a media agency?

As a measure of how much of your AGI will still be there after the sale. In a study by the ANA and the 4As, media-only agencies reported about half the average client tenure of integrated full-service agencies:

Short notice periods add to the risk. Omnicom says substantially all of its client contracts let either side cancel on short notice, typically 90 days, without penalty. In a TobinLeff study of more than 60 buyers, as Axial reported it, client retention and churn ranked second only to EBITDA margin as a value driver.

Lewis Silkin, a UK law firm, says earnouts are popular in advertising and marketing deals because so much value sits with the founders and their key client relationships. Among the seller protections it lists is a bar on the buyer moving key client accounts to another company in its group. That is UK practice; if part of a U.S. price depends on media clients staying, ask your attorney about the same protection.

Do clients have to consent to a sale?

It depends on how the deal is structured. In an asset sale your client contracts move to the buyer by assignment, which triggers any assignment clause and the need for the client's consent. In a stock sale the company keeps its contracts, and consent is needed only if a contract bars a change of control. That is the general rule as Clark Wilson, a Canadian law firm, describes it; your contracts' wording and governing law decide.

Asking for consent raises confidentiality issues, the firm notes. FE International lists contracts that terminate on a change of control among the predictable red flags in marketing agency diligence. Have counsel read your client agreements before you sign a letter of intent. The guide to client concentration and retainers covers how buyers weigh a large client.

Can a buyer use an SBA loan to buy a media or ad agency?

Yes, if the deal fits SBA's rules, and your revenue basis can matter for size. The rules below are from SBA's SOP 50 10 8.1, which took effect October 1, 2026 and applies to 7(a) applications issued an SBA loan number on or after that date. Applications submitted through September 30, 2026 stay under SOP 50 10 8.

Size. In an acquisition, the buyer and the business it buys must meet the size standard together. For advertising agencies, receipts exclude funds received in trust for an unaffiliated third party, such as bookings or sales subject to commissions, with the commissions counted as revenue. That footnote names only 541810 and does not say whether pass-through media counts as funds held in trust, so ask the lender.

A loan amount is not a purchase price, and which code applies is the lender's call. Census places full-service agencies that also plan and buy media under 541810, and lists advertising (541810) and media buying (541830) agencies in the same industry group, 5418. Under SOP 50 10 8.1:

• Buyer equity. For an Initial Acquisition, the buyer must inject at least 10% of total project cost, and the lender cannot reduce it. For a Business Expansion, where a business operating at least two full fiscal years under current ownership buys 100% of another in the same four-digit NAICS group, the lender may reduce or eliminate the injection if the buyer has enough liquidity and working capital.
• No earnout. A 7(a) loan financing a change of ownership cannot include a seller earnout, though buyer rebates tied to performance are allowed.
• Seller notes on full standby. A seller note counts toward the buyer's injection only if it is subordinated with no principal or interest payments for the whole term of the 7(a) loan. Seller debt with other limited sources can supply no more than half of the injection.
• Consultant only. In an Initial Acquisition or Business Expansion, you generally may not stay as an officer, director, stockholder or employee, but the business may contract with you as a consultant for up to 24 months in total.
• Quality of earnings. In an Initial Acquisition or Business Expansion priced at $3 million or more, the lender must obtain a quality of earnings report as well as the business valuation.

Together, the earnout ban and the consultant limit mean that with a 7(a) loan, the buyer cannot pay you more later for media clients who stay, and you can generally help keep them only as a consultant. The SBA section of the guide to selling a marketing agency covers the rest.

What should a media agency owner prepare before talking to buyers?

TobinLeff says a third-party quality of earnings review of your tax returns, bank statements and general ledger, not the headline EBITDA, decides what a buyer pays and how certain the close is. FE International's diligence list starts with three years of P&Ls and balance sheets, tax returns, client contracts and revenue by client by month. For a media agency, add these:

• Monthly accrual P&Ls with billings, pass-through media and AGI shown apart, by client, and an adjusted EBITDA bridge
• Principal buying, if any, split from fee and commission work, with its own margin
• Each client's start date, notice period, annual AGI, media reviews and change-of-control terms
• Vendor and insertion-order liability terms, and any client that has paid late in the last two years
• Month-end media payables, client prepayments and media advances, for the peg
• Every ad account with its owner, where it sits and who has access
• Partner badges and the certified staff each one depends on

If you run retargeting or audience work, have counsel check your client contracts against California's privacy law. The CCPA regulations say a service provider or contractor cannot contract with a business to provide cross-context behavioral advertising.