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Agency Valuation Estimator

The Agency Valuation Estimator provides an indicative business value from annual revenue, profit margin, and selected revenue and earnings multiples. It calculates both a revenue-based value and an earnings-based value, then reports their midpoint as a blended reference.

This tool is designed for preliminary planning, not a formal appraisal. Actual transaction value can change with client concentration, recurring revenue, owner dependence, growth, contract quality, working capital, debt, and buyer terms.

Enter your assumptions

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Result
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Blended indicative equity value
Operating profit—
Revenue-based equity value—
Earnings-based equity value—
Range—

1. Enter annual revenue
Use a normalized trailing or forward twelve-month revenue figure.

2. Set operating margin
Enter operating profit as a percentage of revenue before applying the earnings multiple.

3. Choose market multiples
Enter a revenue multiple and an operating-profit multiple appropriate to the agency profile and market context.

4. Adjust for debt and cash
Subtract debt-like obligations and add excess cash to estimate equity value.

5. Review both methods
Compare the revenue-based and earnings-based values rather than relying only on the midpoint.

Revenue Value = Annual Revenue × Revenue Multiple − Debt + Excess Cash
Earnings Value = (Annual Revenue × Profit Margin) × Earnings Multiple − Debt + Excess Cash
Blended Value = (Revenue Value + Earnings Value) ÷ 2

Where:

  • Annual Revenue = normalized revenue for one year
  • Profit Margin = operating profit divided by revenue
  • Revenue Multiple = selected multiple of annual revenue
  • Earnings Multiple = selected multiple of operating profit
  • Debt and Excess Cash = adjustments from enterprise value to equity value

What the result means

The result is a rough blended equity-value indication based on the two selected valuation approaches.

Multiples are assumptions, not universal standards. Professional valuation should examine risk, growth, client quality, and transaction structure.

Given: $1,000,000 annual revenue, 20% operating margin, 1.0× revenue, 5.0× earnings, $80,000 debt, and $30,000 excess cash.

Calculation: Profit = $1,000,000 × 20% = $200,000. Revenue value = $1,000,000 − $80,000 + $30,000 = $950,000. Earnings value = $200,000 × 5 − $80,000 + $30,000 = $950,000.

Result: The blended indicative equity value is $950,000.

Is this enterprise value or equity value?

The multiple calculations begin as enterprise-value approaches, then debt is subtracted and excess cash is added to produce an indicative equity value.

Which profit figure should I use?

Use the profit measure that matches the selected multiple. This page uses operating profit; do not enter a multiple based on a different earnings definition without adjustment.

How do I choose a multiple?

Use comparable transactions, market evidence, and professional judgment. Multiples vary substantially by growth, recurring revenue, size, concentration, and risk.

What if the two methods differ widely?

A wide range signals that the chosen margin or multiples may reflect different assumptions. Review the inputs and investigate why revenue and profitability imply different values.

Does the estimate include working capital?

No explicit working-capital adjustment is made. Deal terms may require a normalized level of working capital at closing.