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| Rick Gould |
The public relations industry is entering one of the most transformative periods in its history. Artificial Intelligence isn’t simply another tool in the communications toolkit—it’s fundamentally changing how agencies operate, scale and deliver value to clients. It’s also reshaping how buyers—particularly private equity firms and strategic buyers—value PR firms.
For agency owners contemplating a sale in the next two to five years, understanding how AI will influence valuation is central to achieving the highest possible recasted EBITDA multiple and ultimate value.
From labor-based to intelligence-based valuation
Historically, PR firm valuations have been driven by a combination of financial performance and qualitative factors. Revenue size, recasted EBITDA margins, client concentration percentages, sector specialization and second tier of management depth have all played central roles. PR firms have been valued as labor-based businesses, where revenue is tied directly to billable hours, billing rates and staff utilization.
AI is changing the equation
Firms that successfully integrate AI into their workflows are transitioning from labor-based models to intelligence-driven platforms. This shift has profound implications. When the output is no longer tied to hours, scalability will improve. Profitability margins, in theory, should improve. Deliverable results should happen faster and more consistently.
Buyers will now be asking a question that hasn’t been asked in the past: Is the firm simply selling hours—be it a monthly retainer or project-based—or is it leveraging technology that will multiply the output and insights? The answer will directly impact valuation multiples and the ultimate monetization of the firm.
| This article is featured in O'Dwyer's May '26 PR Firm Rankings Magazine |
Margin improvement and recasted EBITDA increase
One of the most immediate and measurable impacts of AI is on operating margins. AI tools significantly reduce the time required for research, media tracking, content preparation and data analysis.
Agencies that effectively train their staff to use these tools can increase their output and productivity without adding staff. This will result in higher EBITDA margins. Higher EBITDA margins equate to a higher valuation and down payment at closing. However, buyers are not just looking at growth in margins. They will also be evaluating the quality and sustainability of those margins as they closely look at client concentration and high-margin specialties.
If margin improvement is driven by disciplined integration of AI into repeatable processes, buyers view this as a structural advantage. Alternatively, if margin improvements aren’t consistent, buyers may discount the perceived benefit and increase in value. Every situation is different and is evaluated independently.
Bottom line is if a PR firm is showing consistent, AI-enhanced margin growth, it may command a premium valuation, higher than a comparable firm without such capabilities. Eventually, these capabilities won’t be optional. They’ll be essential and required. Firms that aren’t committed to investing in advanced AI technology should most likely consider selling the firm now, before the lack of sophisticated AI makes the firm antiquated.
Scalability and growth potential
Scalability has always been a key driver of valuation, but AI is redefining what scalable growth looks like in the PR sector.
Traditionally, growth required adding additional staff and more risk. It increased fixed labor costs and created pressure on delivering high utilization rates for all staff, not part of management or assigned to generating new business. AI changes this dynamic by allowing firms to grow revenue without a proportional increase in their team.
Buyers, particularly private equity firms, place a premium on businesses that can scale efficiently. A PR firm that demonstrates the ability to onboard new clients, expand service offerings and increase output through AI-enabled systems becomes significantly more attractive and commands a higher valuation.
This is especially relevant for firms in the $5–$25 million revenue range, where buyers are actively seeking platform firms that can double, triple or quadruple in size. AI-enabled scalability directly supports this thesis. And seller firms that have the ability to multiply in size, with consistent profitability, will reward the seller on payday.
Service evolution and revenue mix
AI can also assist and influence the services the PR firms offer and how to price those services.
Firms are increasingly incorporating data analytics, predictive AI software and AI-driven content strategies into their offerings. This shifts the perception of the firm from a traditional communications provider to a more strategic, data-informed partner with the client.
Both PE firms and strategic buyers favor firms with higher value strategic service offerings that are less commoditized and more unique.
Also, another key point is that AI can support more recurring revenue models, versus project-based fees or hourly billing, such as ongoing analytics and strategic advisory services. Recurring revenue is highly valued in M&A transactions, providing both predictability and stability.
Risk considerations and buyer due diligence
Buyers are increasingly evaluating how PR firms are using AI, focusing on data security, confidentiality and intellectual property areas.
Firms that proactively establish clear AI policies and controls will be viewed favorably and very attractive. Those who can’t do this will not be as favorable and will not justify maximum valuation. There’s a distinction between AI-enabled and AI-dependent. AI-enabled firms enhance their human expertise, not a replacement for it. Strong strategic thinking will always be valued highly.
The critical human factor
PR will always be a relationship-driven business. AI can’t replace trusted client relationships, creative judgments that need to be made, or strategic counsel.
Leadership teams are still very important aspects in valuation, as is client retention. Firms that can demonstrate both strong AI and team expertise will be the most desirable and receive the highest valuations.
For PR firm owners, the message is clear. Those who embrace AI and integrate it into their operating model will be positioned to demand higher valuations.
Preparation is key
Firms must focus on demonstrating consistent, AI-driven margin improvement by building scalable systems that will enable growth without hiring a proportion equal to the growth. They must expand into higher-value service offerings and establish best practices around AI use. And, most importantly, they must maintain strong leadership and client relationships. Firms must prepare financially, operationally and strategically, the end result being the justification of higher valuations.
The AI revolution is already reshaping the PR industry and M&A landscape. Valuations, which traditionally have been based on historical results, will increasingly be reflective of how a firm is positioned for the future. AI is a critical part of the equation.
For buyers, it represents additional depth of the prospective seller firm. For sellers, it represents both a challenge and a financially rewarding opportunity.
Those in the C-Suite who are visionary and lead in the AI revolution will be well rewarded when they ultimately see their efforts monetize their firm.
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Rick Gould, CPA, J.D., is Managing Partner of Gould+Partners, a merger and acquisition consultancy specializing in the PR sector.
Why scalability has increasingly become the deciding variable in PR M&A.
For public relations agency owners planning to sell, preparation and investment across several key areas will yield the highest valuations and exit terms in 2026.
Kekst CNC represents the DallasNews Corp. as it gets acquired by Hearst Corp. for about $75M. The 140-year-old Dallas Morning News will join Hearst's 28 dailies.
