Fixed-fee valuations of web, development, SEO, performance and social media agencies.

A digital agency is valued on the maintainable profit from its recurring and repeat work, adjusted for the risks a buyer inherits. Support, hosting, SEO and ad management retainers usually carry more value than one-off website builds, while client concentration, reliance on one technical lead and dependence on a single platform pull value down. Client ad spend is not agency income. Agency Valuations prepares an independent written report at a fixed fee: $1,495 + GST for agencies turning over under $2 million, delivered in 2 business days.

How is a digital agency valued?

We value most web, development, SEO, performance and social agencies on capitalised maintainable earnings. Your accounts are adjusted to what a new owner could expect to keep earning: owner pay is reset to a market wage, one-off items are removed, and development costs that were capitalised or expensed are treated consistently from year to year.

Revenue is then split into its streams, because each carries a different level of risk. A dollar of profit from a long-running care plan is worth more than a dollar from a one-off build, and the capitalisation rate reflects the mix. The report sets out each step, so a buyer, a co-owner or your accountant can follow how the value was reached.

Which digital agency revenue is worth the most?

We test each stream on how likely it is to continue under a new owner:

• ·Hosting, maintenance and support plans: small monthly amounts that tend to stick, valued on cancellation history and on whether the agency controls the hosting and domain accounts.
• ·SEO, paid media and social retainers: valued on term, notice and how long clients have stayed. Performance retainers can move with client budgets, so their history matters.
• ·Website and app builds: valued on the repeat pattern of clients and referrers, and on margin after overruns. A pipeline of unsigned quotes is noted, not counted.
• ·Software, plugins or apps the agency owns and licenses: valued on subscription history and what it costs to keep them maintained and secure.
• ·Ad spend managed for clients: excluded from income. The agency's value lies in its management fee and the client relationship, not the media budget.

How does work in progress on builds affect the value?

Fixed-price builds create timing gaps. A client may have paid a deposit or milestone for work not yet done, which is a liability the buyer takes over, or the agency may have delivered work it has not yet invoiced, which is an asset. We measure work in progress at the valuation date, including the cost to finish any project running over budget.

A normal level of working capital is assumed to stay with the business. If the agency habitually collects deposits well ahead of delivery, the cash in the bank partly belongs to that future work and is not surplus to be paid out on top of the value.

How do platforms, partners and key people affect value?

Digital agencies work on platforms they do not control. A search algorithm update, an ad platform policy change or a price rise by a website or e-commerce platform can hit a whole client base at once, so an agency spread across several platforms and services carries less risk than one built on a single channel.

Partner status with ad platforms or software vendors needs a close read. Where it rests on named staff holding qualifications, or on the spend the agency manages, ask what happens if those people leave or a large client moves on. The same goes for people generally: if one founder or technical lead writes the proposals, holds the client relationships and understands the code base, a buyer will price that risk unless there is a documented handover, a second layer of staff and a realistic transition period.

Who owns the code, the tools and the client accounts?

Under the Copyright Act, work an employee writes under their employment belongs to the employer, but code written by a contractor or offshore developer belongs to its author unless it has been assigned, and an assignment of copyright has no effect unless it is in writing and signed. Client contracts often assign finished deliverables to the client, with a licence back for the agency's own components.

Before valuing a proprietary tool, template library or plugin, we ask for the contractor agreements and IP clauses that show the agency owns it. We also check that domains, hosting, code repositories and software subscriptions sit in the agency's name rather than a staff member's personal account.

When do digital agency owners need a valuation?

• ·Selling the agency, or testing an offer from a buyer or a larger group.
• ·Buying a digital agency or a book of hosting and support clients.
• ·A partner or shareholder exit under your shareholders agreement.
• ·Staff equity for developers or account leads, where shares or options need a market value under the employee share scheme rules.
• ·Restructures and related-party transfers, where tax law looks to market value.
• ·Small business CGT concessions, where market value is needed for the asset threshold tests.
• ·CGT reform: from 1 July 2027 the 50% CGT discount for individuals, trusts and partnerships is replaced by cost base indexation and a 30% minimum tax for gains accruing after that date, so a valuation at 30 June 2027 may be useful.
• ·A dispute between owners, where an expert report is needed.

What do we need from you?

• ·Financial statements for the last three years and year-to-date management accounts.
• ·Revenue by client and by stream (builds, retainers, care plans, hosting, licences) for three years.
• ·A list of recurring clients with start dates, monthly fees and any cancellations in the last two years.
• ·Live projects with contract value, amount billed, deposits held and estimated cost to complete.
• ·Staff and contractor list with roles, pay, location and the IP terms in their agreements.
• ·Partner programs, platform dependencies and who holds each account and login.
• ·Owner salaries, personal costs run through the business, and your shareholders agreement.

How much does a digital agency valuation cost?

Fees are fixed and set by your agency's total annual turnover, excluding GST. A Small Business Valuation is $1,495 + GST for turnover under $2 million, delivered in 2 business days. A Medium Business Valuation is $2,495 + GST for $2 million to $3 million, and a Large Business Valuation is $3,495 + GST for over $3 million to $10 million, each delivered in 3 business days. Above $10 million the fee is quoted in writing before work starts, with the delivery date agreed before commencement. An expert report for a dispute or court is $4,495 + GST, with the delivery date agreed before commencement. Each extra past valuation date is $495 and each additional entity is $795. Delivery time starts once payment and all required information have been received.

Every report follows the guidelines of APES 225 Valuation Services and is signed by a suitably qualified business valuer. We value agencies; we do not broker or sell them.