This is part of our WordPress Agency Acquisition Series. Be sure to view more insights we’ve shared on selling your WordPress agency.
Acquisition conversations have their own vocabulary — and if you’re new to the process, the terminology can make straightforward concepts feel more complicated than they are. This glossary defines every term you’re likely to encounter when buying or selling a WordPress agency, in plain language.
A
Acqui-hire
An acquisition in which the buyer acquires both the seller’s book of business and brings the seller (or a key team member) into a role within the acquiring agency. The financial terms can follow any deal structure, but the defining characteristic is that the seller transitions from independent business owner to employee or contractor of the acquiring agency. Acqui-hires typically produce the highest client retention of any acquisition structure because clients experience minimal disruption.
Asset Sale
A transaction in which the buyer purchases specific assets of the agency — client relationships, recurring revenue contracts, domain, brand assets, equipment — rather than the legal entity itself. Most small WordPress agency acquisitions are asset sales. Contrast with a stock sale.
AUM (Assets Under Management)
Occasionally used in agency contexts to refer to the total portfolio of client websites being actively managed. Not a standard valuation metric but sometimes used as a proxy for portfolio size.
B
Book of Business
The complete documentation of an agency’s active client relationships — every client, the services they’re subscribed to, their billing rate, renewal date, contact information, and relevant account notes. The Book of Business is the foundational document in any acquisition and the basis for calculating MRR and structuring earn-out payments.
Buyer Profile
A defined set of criteria a seller uses to evaluate potential buyers — beyond price — including values, operational approach, client service philosophy, and cultural fit. Sellers who define their buyer profile before entering conversations make better decisions and close deals that hold together post-transition.
C
Care Plan
A recurring monthly service package covering WordPress maintenance — plugin updates, backups, security monitoring, uptime checks, and typically a bank of support hours. Care plans are one of the two primary recurring revenue sources in WordPress agency acquisitions (alongside hosting) and are generally considered high-stickiness recurring revenue.
Churn
The rate at which clients cancel or fail to renew their recurring services. Churn is one of the most closely scrutinized metrics in WordPress agency due diligence because it directly predicts how much of the acquired MRR will survive post-close. Low historical churn is a significant valuation premium; high churn is a discount or dealbreaker.
Churn Rate
The percentage of recurring revenue or clients lost over a given period — typically calculated monthly or annually. A healthy WordPress agency churn rate is generally below 5% annually. Rates above 10–15% annually signal a client retention problem that will affect post-acquisition value.
Client Concentration
The degree to which an agency’s recurring revenue is concentrated among a small number of clients. High client concentration — where one or two clients represent 30–40%+ of MRR — is a valuation risk because the loss of a single client significantly changes the deal economics. Well-distributed client bases command higher multiples.
Client Tracker
A spreadsheet or CRM-based tool used during the acquisition transition to track the completion of each communication and onboarding milestone for every incoming client. Ensures no client falls through the cracks during the handoff process.
Close
The moment at which a deal is finalized — agreements are signed, initial payments (if any) are made, and operational responsibility formally transfers from seller to buyer.
CMS (Content Management System)
The platform on which client websites are built. In WordPress agency acquisitions, CMS compatibility is a key due diligence filter — buyers need to be able to serve clients on whatever platforms the acquired portfolio runs on. Mismatches between buyer and seller CMS capabilities create post-acquisition service delivery risk.
D
Deal Structure
The financial and operational terms of an acquisition — specifically how and when the seller is compensated. The three primary structures are lump sum (full payment at close), seller financing (portion at close, remainder over time), and earn-out (percentage of net recurring revenue over a defined period). See individual entries for each.
Due Diligence
The process of verifying the information a seller has represented before a deal closes. Due diligence in WordPress agency acquisitions typically covers financial records, client roster verification, technical site audits, billing system review, operational documentation, and key person dependency assessment. Our comprehensive due diligence checklist covers every category.
E
Earn-Out
A deal structure in which the seller receives a percentage of net recurring revenue from their former clients over a defined period — typically 24 months — rather than a fixed purchase price at close. The seller typically receives 80–90% of net MRR each month, with the buyer retaining 10–20%. Earn-outs align seller and buyer incentives because client churn directly reduces the seller’s payment.
Earn-Out Tracker
A monthly reporting document shared between buyer and seller in an earn-out deal, listing every acquired client by name, their recurring revenue, associated expenses, and the resulting seller payment. Transparency in the earn-out tracker is essential for maintaining trust throughout the earn-out period.
G
Gross MRR
The total monthly recurring revenue from all active clients before subtracting any operating expenses. Gross MRR is a useful top-line metric but not the figure used for valuation or earn-out calculations. See Net MRR.
Guidebook
An internal document that captures the ethos, standards, and operating principles of an agency — how client communication is handled, what quality standards apply, how the agency positions its services. Distinct from an SOP, which covers specific processes; a guidebook covers the broader cultural and operational philosophy. Both are important documentation assets for buyers evaluating an acquisition.
K
Key Person Dependency
A situation in which the value of an agency is heavily concentrated in a single individual — typically the owner — who holds most client relationships, technical knowledge, and operational decision-making. High key person dependency is a valuation discount and increases transition risk. Addressing it before a sale significantly improves both valuation and transition outcomes.
L
Letter of Intent (LOI)
A non-binding document that outlines the proposed terms of an acquisition before a formal agreement is drafted. LOIs typically cover the deal structure, purchase price or earn-out terms, exclusivity period, and due diligence timeline. Signing an LOI signals serious intent from both parties and typically triggers the formal due diligence process.
Lump Sum
A deal structure in which the full agreed purchase price is paid at or near close. Lump sum deals offer the seller maximum certainty and a clean exit, but require the buyer to have or access significant capital upfront. They also require strong due diligence from both parties since post-close recourse is limited.
M
MRR (Monthly Recurring Revenue)
The total predictable monthly revenue generated by recurring services — hosting, care plans, retainers. MRR is the primary valuation driver in WordPress agency acquisitions and the metric most scrutinized during due diligence. Buyers pay a multiple of MRR because they’re acquiring the right to collect that revenue going forward.
Multiple
The factor applied to monthly net MRR to calculate a lump-sum valuation. WordPress agency acquisitions typically trade at 24–36x monthly net MRR, with the specific multiple driven by quality factors including service stickiness, client concentration, churn rate, documentation quality, and key person dependency.
N
Net MRR
Gross MRR minus the direct operating expenses associated with delivering recurring services — hosting costs, plugin licenses, contractor time, SaaS tools. Net MRR is the figure used in valuation calculations and earn-out payments because it represents the actual economic value of the recurring revenue, not just the top-line number.
Non-Compete Agreement
A contractual provision in an acquisition agreement that restricts the seller from operating a competing agency for a defined period and within a defined scope after the sale. Non-competes are standard in most agency acquisitions. Scope (geographic, service-specific, client-specific) and duration are negotiable.
Non-Solicitation Agreement
A contractual provision that restricts the seller from actively soliciting former clients or employees after the sale. Distinct from a non-compete — a non-solicitation doesn’t prevent the seller from working in the industry, only from targeting specific relationships built during their ownership.
P
P&L (Profit and Loss Statement)
A financial statement summarizing revenue, expenses, and net income over a defined period. Buyers typically require 24 months of clean, accurate monthly P&L statements during due diligence. Disorganized or incomplete P&Ls are a significant friction point in acquisition timelines.
Partial Acquisition
An acquisition in which the buyer purchases only a portion of the seller’s business — a specific client segment, service line, or geographic market — rather than the entire agency. Partial acquisitions are useful when a buyer only wants to acquire services that fit their existing model, or when a seller wants to wind down certain parts of their business while retaining others.
R
Recurring Revenue
Revenue generated by services clients pay for on a regular, ongoing basis — typically monthly — without requiring active reselling. In WordPress agency acquisitions, recurring revenue is the primary valuation driver. The three most common types are hosting, care plans, and retainers. Each carries different stickiness characteristics and post-acquisition retention risk.
S
Seller Financing
A deal structure in which the seller accepts a portion of the purchase price at close and the remainder in scheduled payments over a defined period — typically one to five years, often with an agreed interest rate. Seller financing is a middle ground between lump sum and earn-out — fixed total price, but spread over time.
Silver Wave
A term describing the demographic shift underway in the WordPress agency space, where a large cohort of agency owners who built their businesses in the 1990s and 2000s are approaching retirement age without succession plans. The silver wave represents a significant and growing supply of acquisition-ready agencies for qualified buyers.
SOP (Standard Operating Procedure)
A step-by-step written process for a specific recurring task — how to onboard a new hosting client, how to process a plugin update pass, how to handle a billing dispute. SOPs are a critical documentation asset in any acquisition because they allow the buyer to serve acquired clients consistently without relying on the seller’s institutional knowledge.
Stickiness
The degree to which a recurring service is resistant to cancellation. In WordPress agency acquisitions, stickiness is a key quality driver in valuation. Hosting is the stickiest service (canceling means losing the website); care plans are high-stickiness; marketing retainers are lower-stickiness because clients can cancel without immediate consequence.
Stock Sale
A transaction in which the buyer purchases the legal entity (the corporation or LLC) itself, inheriting all assets and liabilities. Stock sales are less common in small WordPress agency acquisitions — most are structured as asset sales — but may be preferred in specific circumstances for tax or legal reasons.
T
Tech Debt
The accumulated backlog of unresolved technical issues in a client portfolio — outdated PHP versions, deprecated plugins, abandoned themes, unpatched security vulnerabilities. Tech debt represents a future support burden that buyers factor into their valuation. A portfolio with significant tech debt is typically discounted relative to a clean, well-maintained one.
Transition Period
The defined window after close during which the seller remains actively available to support the client handoff — answering questions, introducing clients, providing technical context. Typically 30 to 90 days. In earn-out deals, the seller’s financial interest in retention naturally extends their engagement through the earn-out window.
Triple Win
CyberOptik’s acquisition framework, which holds that a successful acquisition must create a genuine win for three parties: the buyer, the seller, and the clients. Deals that optimize for two parties at the expense of the third are not considered successful outcomes. See our post on the Triple Win framework.
V
Valuation
The process of determining what a WordPress agency is worth to a buyer. Valuation is primarily driven by net MRR and a multiple that reflects the quality of the recurring revenue base. Key quality factors include service stickiness, client concentration, historical churn, documentation quality, and key person dependency. See our dedicated post on WordPress agency valuation multiples.
Value Add
Something a buyer offers — beyond price — that creates additional value for a seller. Common value-adds in WordPress agency acquisitions include a strong client transition process, operational infrastructure that benefits incoming clients, and a track record of successful acquisitions. Sellers who care about their clients often weigh value-adds heavily alongside financial terms.
If you have a term you’d like defined that isn’t here, reach out to us directly — we’re happy to help.
