The true value of an agency is 'whatever someone turns out to be willing to pay for it while you are simultaneously willing to sell' and so is only properly found through negotiation if you decide to sell.

But having a rough internal estimate of agency valuation can be a very useful metric for discussion at Owner and Board level in the business. It's even useful if you plan never to sell.

Of course, what matters in tracking that metric is the changes. The figure itself won't ever be 'right', but the changes in it will give you some idea of the growth in value of the business. To track those changes you need to stick with the same way of calculating it all the time. Otherwise you're gaming the number, and it's not a useful thing to discuss.

There are lots of ways that an agency business can be valued, at varying levels of complexity, but for the purposes of internal use we want to stay relatively simple.

Valuation methods

Here are some approaches to consider. Decide what feels right for your agency and then stick to it, because it's monitoring the change that matters more than the actual number.