Ephor Group is a Management Advisory firm that invests resources in our clients to create wealth producing enterprises.

Marketing Services

All businesses need more customers. The B2B Marketing Services market for mid-market businesses is highly fragmented, yet is positioned for robust growth as providers consolidate, reliance on outsourcing providers continues to become mainstream for the majority of small businesses, and competitive pressures intensify.

Industry leaders who create recurring revenue business models, vertical competencies, focus predominantly on a few targeted segments, and require limited capital expenditures are attractive investments. Capital that supports growth – via acquisition or geographic or product expansion – is available for founders of B2B Marketing Services organizations.

The Marketing Services market is highly attractive, and firms that create well-performing businesses with a sustainable advantage in end-markets that are growing at attractive rates our creating significant wealth.

Marketing Services Industry Landscape

The market is made up of the following technology/software providers and regional players:

  • Systems Implementation Firms for Microsoft Dynamics, SalesForce.com, NetSuite, Zoho, and other Marketing/Sales Automation Tools
  • SaaS Providers: ConstantContact, Eloqua, Genie, iCentera, iContact, SilverPop, netFactor, SearchForce, Delivra, ExactTarget, Manticore, Marketo, Conversen, InfusionSoft, VTrenz
  • Internet Marketing: WebMetro, ClickFuel, HubSpot, Apogee Search, PopLabs, Point Clear
  • Demand Generation: ClickFuel, LeadDogs, Bulldog, ClickSpeed
  • Agencies: Advertising or PR (too numerous to name)
  • Consultants: Strategy, Branding/Messaging, Sales Execution, Loyalty, etc.
  • Outsourced Providers (Staffing): No major regional players exist
  • Point Specific: Events and Trade Shows, Sales Promotion, Call Center, Market Research, Sales Training, Data Management, Channel

Marketing Services' Investable Business Attributes:

(i.e. attractive business models)

  • Provider of Internet marketing services to small and mid-sized businesses (SMBs)
  • Leverage a variety of web-based tools for automation, analytics, and nurturing
  • Cash flow positive with an established recurring revenue model with multiple products/services
  • Unique product or business model, replicable into other geographies or markets
  • Significant value creation potential through organic growth > 30% per year, operational improvements and acquisition growth strategies
  • Unique value proposition/defendable niche with sustainable competitive advantantage

Marketing Services Market Opportunity

The marketing services sector is rich in opportunities for consolidation and therefore attracting private equity investment. There is a large pool of uninvested capital seeking returns; and increasingly active corporate and strategic buyers. Transaction multiples are currently pegged around 4-8X times EBITDA (pretax profit) and 2-5X times EBITDA for deals less than $20 million for technology based firms and 1X to 4X revenues for small, growth oriented labor intensive firms (based on Ephor Group deal sources, CapitalIQ and Thomson Financial data).

Valuation Multiples

Category Price Revenue Multiple*
Business Process Outsourcing 1.5 to 3.9X
Marketing Systems Implementers 1 to 2.9X
Outsourced Sales Provider 1 to 6X
Outsourced Marketing Provider 1 to 5X
Marketing Services 1 to 4X
Marketing Technology 1 to 8X

* revenue multiple depending upon how the business is classified (does not include pass through advertising)


The Key Success Factors for attracting institutional investment include:

  1. Validate and Create Raving Fans for each Vertical Market: Vertical Specific Solution Capability Practices

  2. Implement Branded Recurring Revenue Model Suite of Products: Customer Lifecycle Portfolio Recurring Revenue Model

  3. Validate Scalable Services Platform: Validate Key Operating Indicators such as
    > $150k revenue-per-employee and > $20k EBITDA

  4. Offers Better Solution at Lower Cost than Alternatives

  5. Create Strategic Optionality: Serve multiple industries, with multiple services, supported by multiple systems/tools

  6. Validate Customer Acquisition Model: 1/3 new sales from referrals, 1/3 from alternative distribution. 1/3 from executive

  7. Validate Client Satisfaction: Retention > 3 years

  8. Eliminate owner or key employee dependence and single threadedness

  9. Ramp and scale of roles for all positions

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