{"id":54,"date":"2025-10-07T16:27:45","date_gmt":"2025-10-07T16:27:45","guid":{"rendered":"https:\/\/www.herringbonedigital.com\/blog\/?p=54"},"modified":"2025-10-14T15:39:30","modified_gmt":"2025-10-14T15:39:30","slug":"post-5-of-24-what-metrics-do-buyers-care-about","status":"publish","type":"post","link":"https:\/\/www.herringbonedigital.com\/blog\/2025\/10\/07\/post-5-of-24-what-metrics-do-buyers-care-about\/","title":{"rendered":"Post #5 of 24 &#8211; What Metrics Do Buyers Care About"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\">In the previous post, we talked about some of the items that can lead to higher (or lower) multiples. In this post, I wanted to dive a little deeper into 3 that really matter. .<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">I call it the <strong>Triangle of Value.<\/strong><\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li><strong>Retention<\/strong> \u2013 are your clients sticking around? High churn kills value. Delivering results, sticky services, and satisfied customers create recurring revenue. What\u2019s good? Good agencies will have ~75% gross revenue retention. This means, for any given cohort of customers, at least 75% of them are still around 1 year later.<br><\/li>\n\n\n\n<li><strong>Growth<\/strong> \u2013 is your revenue moving up and to the right? Flat revenue is definitely a worrying sign for a buyer. Aim for growth around 15-20%, but make sure that it\u2019s good quality growth that does not negatively impact retention.<br><\/li>\n\n\n\n<li><strong>Profitability<\/strong> \u2013 are you generating sustainable margins? Buyers don\u2019t just want growth, they want efficient growth. For agencies that have predominantly US-based employees, strive for margins of 20-25%; if your agency outsources work to a low-labor cost country, those margins could push into the 30%-ish range.<br><\/li>\n<\/ol>\n\n\n\n<p class=\"wp-block-paragraph\">Why does this triangle matter? Because together, these three create <strong>predictable cashflow.<\/strong> And predictable cashflow is the holy grail in M&amp;A.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">I\u2019ve seen agencies with $10M in revenue but shaky retention get discounted heavily. I\u2019ve also seen $5M agencies with strong retention and profitability get bought for premium multiples.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The takeaway: you can\u2019t ignore any corner of the triangle. Growth without profitability isn\u2019t sustainable. Retention without growth gets stale. Profitability without retention is fragile.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong><em><a href=\"https:\/\/www.herringbonedigital.com\/contact.html\">Contact us <\/a>if you\u2019re and agency owner and have considered selling or joining something bigger.<\/em><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>In the previous post, we talked about some of the items that can lead to higher (or lower) multiples. In this post, I wanted to dive a little deeper into 3 that really matter. . I call it the Triangle of Value. Why does this triangle matter? Because together, these three create predictable cashflow. And [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-54","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.7 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Post #5 of 24 - What Metrics Do Buyers Care About - Herringbone Digital Blog<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.herringbonedigital.com\/blog\/2025\/10\/07\/post-5-of-24-what-metrics-do-buyers-care-about\/\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:title\" content=\"Post #5 of 24 - What Metrics Do Buyers Care About - Herringbone Digital Blog\" \/>\n<meta name=\"twitter:description\" content=\"In the previous post, we talked about some of the items that can lead to higher (or lower) multiples. In this post, I wanted to dive a little deeper into 3 that really matter. . I call it the Triangle of Value. Why does this triangle matter? Because together, these three create predictable cashflow. And [&hellip;]\" \/>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Post #5 of 24 - What Metrics Do Buyers Care About - Herringbone Digital Blog","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/www.herringbonedigital.com\/blog\/2025\/10\/07\/post-5-of-24-what-metrics-do-buyers-care-about\/","twitter_card":"summary_large_image","twitter_title":"Post #5 of 24 - What Metrics Do Buyers Care About - Herringbone Digital Blog","twitter_description":"In the previous post, we talked about some of the items that can lead to higher (or lower) multiples. In this post, I wanted to dive a little deeper into 3 that really matter. . I call it the Triangle of Value. Why does this triangle matter? Because together, these three create predictable cashflow. 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