Why we killed our holding-company instincts.

Three years ago I had a choice in front of me that most agency founders make the wrong way.

We had six teams. Each one had a specialty: business growth, digital marketing technology, AI solutions, products, education, and capital. Each one could have been a separate brand with its own P&L. That is how the agency industry has been organized since the 1970s. Holding companies. Sister brands. Joint pitches. Internal billing arrangements that the client never sees.

The path of least resistance was clear. Spin each team as its own brand. Six logos. Six websites. Six pitches. A parent entity called Innovative Group that lived as the wrapper around all of them. Everyone in our industry would have nodded. Most of them have built exactly that.

I made the other call. We rebuilt the company around a single P&L. Same six teams, all under one roof, all sharing clients, all accountable to the same outcomes. No internal brands. No separate pitches. One operator on every engagement, with the full partner group behind them.

This is the founder version of why. The strategic version is on the positioning page; this is the why-I-actually-did-it version.

The holding-company tax

I have watched the holding-company tax extract money from clients for fifteen years. The tax is invisible to the client and obvious to anyone running inside one of those brands. It looks like coordination meetings where four agencies pitch the same idea in slightly different language. It looks like joint proposals where each brand pads its own scope because the inter-brand billing rules require it. It looks like a Tuesday strategy call where six people from four brands argue about whose turn it is to drive the deliverable.

The tax is real. The client pays it. The brand portfolio benefits from it. The actual work suffers from it.

Once I saw it, I could not unsee it. Every agency I worked with as a buyer in the early 2010s had this problem. Every operator I respected was hitting the same wall. The brand-portfolio shape was the constraint, not the people running inside it.

What the operating-company shape costs

I am not going to pretend the operating-company shape is free. It costs three things.

It costs brand specialization. We do not have an "AI brand" that markets the AI work separately. The AI team operates as one of six specialties inside IG. The trade-off: we lose some category SEO equity that a dedicated brand might capture. The benefit: we gain coordination by default.

It costs partner economics. In a holding-company model, you can sell off individual brands. Each one has its own valuation. In an operating-company model, you sell the whole thing or none of it. The exit is one decision, not six.

It costs internal politics about resource allocation. Inside a holding company, each brand has its own P&L and its own headcount. Internal trade-offs are made by leadership. Inside an operating company, every staffing decision is a partnership decision. Which client does the senior AI operator support this quarter? Which engagement gets the senior strategist? The conversation is harder because there is no internal "no, that's their team" defense.

I think all three costs are worth paying. Two years in, I am more confident in that than I was when we made the call.

What the shape unlocks

Three things the holding-company shape cannot do.

First, the operating-company shape lets a single engagement span all six specialties without a separate sale per specialty. A B2B SaaS client at $30M ARR needs strategy, technology, AI, and capital integrated. They cannot buy four separate engagements from four sister brands without choking on the coordination cost. They can buy one engagement from us.

Second, the operator on the engagement actually carries the relationship. In a holding-company shape, the operator changes with the brand. The client gets handed between teams. In our shape, the operator is the partner-level person from day one, and they stay.

Third, decisions about the work happen at the operating level instead of at the brand-portfolio level. When a client engagement needs to flex from a marketing-tech rebuild to an AI deployment, the team flexes inside the engagement. No new contract. No new sister brand pitching in. Same operator, expanded scope.

Why I expect more operating companies in 2027

The mid-market buyer cannot afford the holding-company tax. They cannot afford the Big Four either. The shape that fits the mid-market is operator-led, single P&L, cross-capability under one roof. That is an operating company.

Most agencies do not see this shift yet. Some of them will rebuild. Most of them will not, because the holding-company structure has incumbency advantages (sister-brand cross-sell, brand portfolio liquidity, M&A optionality) that are hard to walk away from once they are built. The agencies that did not commit to a portfolio yet have a window to choose the operating-company shape now and skip the rebuild entirely.

I am writing this for the founders making that choice over the next 18 months. The default is to build the holding company. The structural argument runs the other way. The mid-market is waiting for what an operating company actually delivers, and the first ten that deliver it cleanly will define the category.

We made the choice in 2024. The work since then has confirmed it three times over. If you are running an agency right now that is starting to fragment into separate brands, this is the moment to ask whether you are taking the obvious path or the right one.