A benchmark dataset is only as useful as the discipline with which it is read. The GPS methodology pages cover the three discipline layers: which benchmark to select for which question, how to run a variance analysis correctly, and the terminology that prevents the apples-to-oranges errors that undermine undisciplined benchmark work. This page is the methodology overview.
GPS vs. BPS, by question.
The foundational methodology decision is which dataset to use. The GPS-vs-BPS decision framework:
| Question | Dataset | Why |
|---|---|---|
| Operational variance diagnosis | GPS | Metro/focus segmentation; granular small-tier |
| M&A valuation anchor | BPS | Pro-Forma EBITDA; top-quartile reference |
| Sub-$1.25M target | GPS | Only structured reference below BPS floor |
| Rule-of-20 deal-readiness | BPS | Organic growth + pre-tax profit metrics |
Picking the wrong dataset is the foundational error. Applying an EBITDA multiple to a GPS pre-tax-profit number mis-prices a deal; diagnosing operational variance against a top-quartile BPS benchmark mislabels a typical agency as deficient. The selection decision precedes all analysis.
Match, classify, prioritize, plan.
GPS variance analysis is a four-step workflow:
- Match — identify the agency's tier and segment (revenue tier + metro size + business focus), and select the precise GPS benchmark.
- Classify — compute each metric's variance band: V− (25%+ below median), OK (within range), V+ (25%+ above median).
- Prioritize — rank the V− deficits by impact; the deficit on revenue per person or the Spread typically matters more than a deficit on a minor expense line.
- Plan — translate the prioritized deficits into an operational improvement plan (the seller's pre-sale value-prep work, or the buyer's post-close integration targets).
The workflow turns raw benchmark comparison into an actionable diagnosis. For a seller, the V− deficits are the multiple-depressors to address in the 12–18 month preparation window. For a buyer, the V− deficits are the post-close operational-improvement opportunities that justify the multiple-arbitrage thesis.
Guarding against apples-to-oranges.
GPS pre-tax profit is not BPS EBITDA. The Spread is not a margin. Variance bands are ±25% of median, not arbitrary. The unified glossary is the guard against the apples-to-oranges errors that undermine undisciplined benchmark work.
The methodology's third layer is terminology discipline. The most common benchmark errors are definitional: treating GPS pre-tax profit (includes D&A) as interchangeable with BPS EBITDA (excludes D&A); reading the Spread (revenue per person minus comp per person) as a profit margin; misinterpreting the variance bands. The unified glossary — covering GPS and BPS terminology together — is the reference that prevents these errors. The discipline ties back to the source-aware-citation principle that governs all market-benchmark work: cite the source, cite the vintage, cite the methodology.
The GPS methodology completes the GPS sub-cluster alongside the tier benchmarks and segment benchmarks. The broader agency benchmarks unified reference Pillar covers the routing logic across all four datasets — GPS, BPS, Producer Compensation, Future One.