M&A Market Report: Acquiring Marketing Agencies - Smart Move in 2025?
Introduction: The Business of Building Other Businesses
Marketing agencies are the ultimate builder business - they grow other brands while building their own recurring revenue machines. And in 2025, Canadian agencies are catching the eye of both strategic acquirers and first-time buyers.
Whether focused on digital ads, branding, content, or web design, agencies benefit from low overhead, sticky client relationships, and the ability to scale services with systems (not inventory). Plus, Canada’s bilingual market and growing SME base make it fertile ground for niche agencies.
Let’s take a look at how these businesses are performing and what to look for if you’re thinking of buying one.
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Industry Breakdown: Lean, Creative, and Scalable
The Canadian marketing agency industry is worth an estimated $15 billion in 2025, with over 25,000 agencies operating across the country. The majority are small (under 20 employees) and service local businesses, startups, or mid-market firms.
Service types include:
Digital marketing (PPC, SEO, social media)
Branding and creative
Web design and development
Content marketing and copywriting
PR and influencer strategy
Revenue is typically driven by monthly retainers, project-based contracts, or a hybrid of both. Some agencies also offer white-label services for other agencies, or performance-based pricing for ad spend management.
Industry Trends: What’s Shaping Canadian Agencies?
1. Retainer-Based Revenue Wins Agencies with 6–12 month retainers offer more predictable income and are easier to value. Buyers love stability.
2. Niching Down Drives Premiums Agencies that specialize in specific industries (like healthcare, SaaS, e-commerce) or platforms (like HubSpot, Shopify) can command higher multiples.
3. AI & Automation Integration Agencies adopting AI tools for content, reporting, or paid ad management are improving margins and productivity - critical for scale.
4. Remote Teams Are the Norm Many Canadian agencies operate fully remote, giving them access to national or global talent. This also means lower real estate costs.
5. Consolidation & Roll-Ups Larger firms and PE groups are buying up niche agencies to expand service offerings or geographic reach - especially those with $1M+ in revenue and recurring contracts.
Industry Finances: What Buyers Should Know
Revenue Benchmarks:
Small agency (1–5 people): $200K–$800K/year
Mid-size agency (6–15 people): $1M–$3M
Larger agencies: $5M+, often with multiple verticals or locations
Profitability:
Net margins: 15–30%, higher with remote teams and retainer-heavy revenue
Owner’s salary often included in SDE (Seller’s Discretionary Earnings)
Valuation Multiples:
Most Canadian agencies sell at 2.5x–4x SDE
Agencies with solid EBITDA and systems sell at 5x–6x EBITDA
Niche agencies or productized services can command a premium
Key Expenses:
Payroll (often 50–70% of revenue)
Software (project management, design, analytics)
Marketing and lead generation
Contractor/freelancer payments
Insurance and taxes
Startup vs. Acquisition:
Starting an agency is low-cost but takes time to build client base
Acquiring one offers immediate cash flow, systems, and relationships
Buy or Bust: Are Agencies Still Worth It?
Marketing agencies aren’t without their challenges - client churn, scope creep, and reliance on talent are real risks. But for buyers who understand service businesses, they offer recurring revenue, low overhead, and scalable growth.
Buy Signals:
Recurring retainer clients across 12+ months
Opportunity to reduce headcount by super powering your agency with AI tools
Documented processes and SOPs
Strong inbound lead generation (not just referrals)
Diversified client base (no single client >20% of revenue)
Skilled team with minimal owner dependency
Red Flags:
High client churn or one-off project revenue only
Big threat of AI replacing the need of owners to hire agencies and instead have AI do all their marketing directly
Over-reliance on the owner for sales or delivery
No CRM or project management systems
Large, inactive client list with no recent billing
Bottom line: for buyers who want a lean, profitable, creative business, marketing agencies in Canada still punch above their weight in 2025.