23rd February 2026
Tony Walford argues that while the largest agency deals may dominate the headlines, it is smaller firms that are generating the greatest volume, competition and momentum in today’s marcomms M&A market.
I had the pleasure of being on a panel at The Drum’s Predictions event a couple of weeks ago. I talked about how, last year, I was a bit early in saying 2025 was going to be the year of the independent agency. Looking back, 2025 was the year we saw many indies start up. But in 2026, I believe we’ll see many more.
As the networks focus in on themselves, how they deal with the impact of AI, consolidate their offers and improve their margins, clients are looking for fleet of foot and the creativity that you get from small, nimble hot-shops, unburdened by legacy thinking, structures and hierarchy.
And as we see more agency startups spinning out of the networks, we’ll also see more collectives forming. Groups of smaller agencies, like Beyond and Harbour, coming together to deliver on client briefs where different capabilities are required. These models allow agencies to retain their own identity and independence, while giving them access to a broad range of marketing skillsets and allowing them to grow.
I was asked about what all this means for the M&A landscape, and it’s here we’re seeing a fundamental shift in size of deals and the nature of buyers, which got me thinking.
For years, the assumption in marcomms M&A has been that the biggest deals tell the most important story. Large network and PE-backed agency groups buying global scale and scope have dominated the headlines. However, in 2025 the nature of buyers in this market changed, for several reasons. And, as the mist lifts on the start of 2026, we’re seeing a very different landscape emerge.
Over the years we’ve got used to the constant cacophony and disruption of geopolitical and macro-economic risks. Think global credit crunch, Brexit, Isis, Covid, Trump v1.0 & 2.0, Ukraine, Gaza. While we’ve seen M&A activity in our sector vary concomitantly, it’s always bounced back, with the bigger agencies – over £10m revenue, £3m EBIT, 100+ people – being the most sought after.
While the network groups have only ever formed a handful of available buyers, they are often looked upon as bellwethers of how the market is performing as a whole. In 2025, with the exception of Publicis and the challenger group Stagwell, the other networks published lackluster results. We have seen large-scale layoffs across WPP and Omnicom/IPG while Dentsu announced a retrenchment back to Japan to put its international arm up for sale, a move it’s now had to row back on in the absence of a buyer.
That said, while there is still strong M&A interest for large independent agencies, particularly from PE-backed emerging groups, the real volume of deal activity today is happening at the smaller end of the spectrum. That’s agencies with up to £10m revenue, £1m–£3m EBIT and fewer than 100 employees rather than larger agencies generating £5m+ EBIT with workforces exceeding 200 people. While the latter still command attention, it is the former that are driving momentum, velocity and competition across the sector.
A widening gap in transaction volume
In practical terms, there are simply more deals taking place among smaller agencies than larger ones. This is not because smaller agencies are inherently better businesses but because they sit in a far more liquid part of the market.
Agencies valued below £15–£20m attract interest from the widest possible buyer pool. Strategic acquirers, private equity platforms, PE-backed bolt-on vehicles, entrepreneurial buyers (such as Common Interest and Brave Bison), and even passive financial investors can all compete in this segment. As a result, demand materially outstrips supply, pushing both pricing and deal activity higher.
Once agencies move into the £5m+ EBIT bracket, the picture changes. The buyer universe narrows sharply, primarily leaving larger PE funds and a limited number of global strategic groups with the balance sheets and integration capability to transact at that level. And fewer buyers inevitably means fewer transactions, even if individual deal values are higher.
Why entrepreneurial buyers are reshaping the market
One of the most significant drivers of small-agency M&A volume is the rise of the entrepreneurial buyer. A few years ago, agency acquisitions were largely the preserve of PE firms and major holding companies. Today, a growing cohort are acquiring agencies as their first platform investment.
Often supported by structured financing, these buyers see agencies as an accessible entry point: asset-light, cash-generative and resilient. This influx of new buyers has dramatically increased competition for agencies in the £1m–£3m EBIT range, while having little impact on the larger end of the market, where deal sizes and risk profiles remain prohibitive for first-time acquirers.
That said, buyers will always be cognizant of the risks commonly found in smaller agencies, those that are sub-£1m EBIT, reliant on one or two clients in their revenue stream or in an area which is competitive or commoditized. Agencies with these characteristics will always struggle to find an acquirer at any sort of premium.
Scale brings complexity, not speed
Larger agencies face a different reality. Transactions at this level are inherently more complex, involving layered leadership teams, international operations, legacy client concentration and often slower growth rates. Due diligence cycles are longer, integration risks are higher and valuation expectations are more tightly scrutinized.
This doesn’t mean large agencies are unattractive. But it does mean fewer buyers are willing or able to transact – particularly as size can price many acquirers out, with a lot of buyers looking to spend less in what is currently seen as a riskier market – and deals take longer to execute. In contrast, smaller agencies benefit from clarity: simpler cost bases, tighter propositions and faster decision-making, all of which support higher transaction velocity.
Clarity beats size in today’s market
Another factor favouring smaller agencies is narrative clarity. Buyers consistently gravitate towards businesses with a clearly articulated proposition, whether that is a defined vertical focus or a specific capability. Smaller agencies are often better positioned to tell that story succinctly while larger businesses can struggle with diluted positioning as they grow, through service expansion or past acquisitions. As I mentioned at the start, it ’s this agility and ability to pivot that clients, and thus buyers, find attractive.
Additionally, while a large full-service agency would appeal to PE buyers looking for a platform acquisition, many trade or PE-backed buyers may already have some of the disciplines on offer and so might only be interested in certain elements within the seller agency’s mix.
Having clarity of offer translates directly into deal activity. Buyers can quickly assess strategic fit, underwrite growth and move forward with confidence.
What this means for the sector
While the largest agencies will always command headline valuations, the center of gravity for M&A activity in marcomms has shifted decisively towards smaller firms. The combination of a broad buyer pool, entrepreneurial demand and simpler deal dynamics means that agencies with £1m–£3m EBIT are now much more in demand than their larger peers.
For founders the implication is clear: size alone doesn’t determine exit opportunity.
In today’s market, focus, profitability and narrative clarity matter far more than headcount. For the industry as a whole, it’s the smaller end of the market that is setting the pace, even if the biggest deals continue to grab the spotlight.