The Unvarnished Truth About Agency Exits, Margin Squeeze, and AI: Reflections on Growth to Gold 2026

Last week, we brought together agency founders, managing directors, and investors at KPMG's Leeds offices for the eighth edition of Growth to Gold.

I've chaired this event over several editions now, and the mandate hasn't changed: cut through the usual conference gloss, ditch the top-line vanity metrics, and have honest, unvarnished conversations about what it actually takes to build, scale, and sell an agency.

Rachael Hesno at Prolific North wrote up a great recap of the day, aptly titled "From 'gruelling' exit processes to squeezed margins". Having spent the day on stage and in the afternoon roundtables with our speakers and attendees, a few critical themes stood out that every agency leader needs to pay attention to right now.

1. The exit process is gruelling — and selling isn't the finish line

For many agency founders, an exit or securing private equity investment is treated like the finish line of a marathon.

During our opening fireside chat, I sat down with three leaders who have lived through the full cycle: Tim Grice (CEO of Connective3), Leigh Gammons (CEO of Tangent), and Martin Corcoran (CEO of Summit Media). All three have navigated either a sale or private equity backing, and all three are still actively running their businesses.

Their reflections on the process were frank:

• Due diligence is invasive and exhausting. If your financial records, client contracts, and employment terms aren't buttoned down, diligence will grind your leadership team into the ground and chip away at your deal value.

• Earn-outs and PE backing change the rules of the game. Taking external investment doesn't mean you get to kick back. You trade founder autonomy for institutional governance, board scrutiny, and rigorous performance expectations.

• Preparation buys you leverage. The founders who achieve clean exits don't start prepping six months out. They spend two to three years building an operating model that can withstand outside scrutiny.

If you aren't building with that operational hygiene today, an exit tomorrow will be painful.

2. "Growth is vanity, profit is sanity" has never been more urgent

Throughout the day, one message echoed in almost every session: top-line revenue growth is hiding significant margin leakage across the sector.

Agencies are navigating rising talent costs, client procurement pressure, and economic headwinds. Too many agencies with healthy turnovers are running on thin operating margins, when a well-governed agency should be nudging EBITDA toward the 20% benchmark.

The difference comes down to commercial discipline:

• Saying no to "trophy" revenue. High-profile logos that tie up senior talent at discounted effective rates destroy margins.

• Protecting gross margin at the front door. Pricing on value and holding scope discipline, rather than racing to the bottom to keep utilisation looking healthy.

• Operational visibility. Knowing your recovery rates and project margins in real time, not waiting for the year-end accounts to discover where the money went.

3. Decoupling the founder: the ultimate test of enterprise value

One of the liveliest parts of the afternoon roundtables centred on founder dependency.

If an agency cannot run smoothly — winning work, retaining clients, and delivering high-quality output — while the founder takes a proper holiday, the business doesn't have enterprise value; it has a well-paid, stressful job for the owner.

Acquirers don't pay strong multiples for founders trapped in delivery or acting as the single point of failure for key client relationships. They pay for capable management teams, clear second-tier leadership, and documented systems. Building that resilience is unglamorous work, but it's what turns a fragile practice into an investable asset.

4. AI and the squeeze on deliverable-led agencies

Inevitably, AI was a prominent thread across the day. The consensus in the room was clear: the era of charging premium margins for routine production and basic deliverables is drawing to a close. Clients know these workflows are being automated, and procurement teams will keep squeezing traditional rate cards.

The agencies that will thrive — and command the best valuations — are those shifting from selling hours to selling commercial outcomes, proprietary frameworks, and senior strategic advice. AI should be used to compress delivery time and expand gross margins, not simply passed on to the client as a discount.

The takeaway

Building an agency to exit isn't just about timing the market; it's about having the governance, financial discipline, and board-level perspective in place long before you ever speak to a broker or private equity house.

Huge thanks to Prolific North, our hosts at KPMG Leeds, sponsors Synergist and Vestd, and every founder and speaker who shared their numbers and scars with the room.

If you're an agency founder wondering whether your margins, governance, and operating structure are truly exit-ready, AgencyNXD exists to pair you with seasoned Non-Executive Directors who have walked this road before. Or book an introductory call to talk through your numbers.