How to Buy Agencies to Grow Your MRR

Session S41 | Day 3 | Speaker: Ron Johnson (Cyber Optic)

Hosted by Stephanie Hudson

Background: Ron Johnson and Cyber Optic

Ron Johnson is the founder of Cyber Optic, a WordPress-focused web agency based in the Chicago area. He began his career as a freelancer around 2020 (his "official journey," though he references work as far back as 2002), building websites with tools like Dreamweaver, Photoshop table-exports, and early web development workflows. By the time of this session, Cyber Optic had grown to a team of 29 people managing over 800 WordPress websites.

Ron's areas of focus and personal interest within the business are operations and scaling, business development, and mergers and acquisitions. He is a self-described introvert, which he acknowledges makes the people-intensive nature of acquisitions a stretch, but notes that the subject matter (agency M&A) makes it much easier for him to open up in conversations.

Why MRR Matters and Why Buying It Is Underrated

Ron opened by framing MRR as the "holy grail" for both agencies and SaaS businesses. The appeal is stability: MRR reduces dependence on project-based revenue, which requires constant sales effort. The question the session addressed is not whether to pursue MRR, but which lever to use to grow it.

Ron identified several levers available to agency owners: Internal growth from existing clients:

• Raise prices. Ron advocated for price increases every couple of years, with transparent communication and some added value offered alongside the increase.
• Introduce new services. An agency that currently only does web design can add SEO, PPC, privacy policy services, or other adjacent offerings, either by building internal capacity or by white-labelling.

External growth through new client acquisition:

• Paid advertising (including running ads for yourself, not just clients).
• SEO and content engines.
• Referral programmes and maintaining top-of-mind awareness with current clients, who are a cheaper and warmer source of new business than cold leads.

Buying MRR through acquisition: This is where Ron focuses most of his energy, and the rest of the session is dedicated to it. The core argument is that when you acquire a book of business, clients are already paying from day one. There is no waiting for a pipeline to mature, no cold outreach volume game, no long sales cycle. The clients already trust their previous provider, and a well-handled acquisition transfers that trust to the buyer.

Ron also made the case for the long-term compounding nature of this strategy. While SEO and paid ads scale slowly, M&A can produce step-change growth, particularly if you develop

a reliable, repeatable acquisition process. He acknowledged the journey is slow at first but pointed to his own trajectory as evidence of eventual acceleration.

Ron's Acquisition Track Record

Ron walked through his portfolio of deals to illustrate the range of structures and circumstances he has encountered. The following summarises the deals he described: W. Greeley Studio (2019): Ron's first acquisition. Warren was already a contractor working with Ron, but Ron needed more of his time. Rather than simply expanding the contractor relationship, Ron acquired him outright. This is sometimes called an acqui-hire, where the primary asset is the person rather than the book of business. Eight clients came with the deal.

AM (book of business, gifted): Someone gave Ron a book of business. His attitude: if it's free, you take it. No deal structure required.

Prism: The first significant agency purchase. Sourced through the Flippa marketplace. This was a six-figure cash deal paid entirely upfront. Ron later came to view upfront full-price deals as high risk for the buyer, and this deal contributed to that lesson.

Best Practising (therapy niche): A book of business in the therapy sector, described briefly as an acquisition of a niche-specific client list.

New Paradigm (seller financing): A 50% down, 50% financed over 12 months structure.

The seller received stability from the upfront portion while the buyer reduced immediate cash outlay. This is described as a mutually shared risk model where the seller effectively provides a loan to the buyer for the remaining half, with interest.

Bold Eye, NSJ, and others: These are described as earnout/payout acquisitions, Ron's now-preferred method. No money upfront; revenue sharing from day one.

Piperwebs (PW): A particularly interesting case where Ron did not acquire the company itself. A company with a proprietary CMS focused on public libraries was shutting down.

They had tried to sell and failed, and were planning to close. One of their clients contacted Ron. He negotiated to become the preferred transition vendor: clients were given one year's notice and directed to Ron's company. The outgoing company received a small kickback for each client that transitioned to Ron. Ron ultimately brought on 66 library clients, plus associated hosting and care revenue. Pricing was set competitively to make the transition attractive.

Ron noted that most of his acquisitions have now been earnout-based, and that the deals were all structured differently early on but have converged on the earnout model as his standard approach.

What to Look for Before Approaching a Deal

Ron outlined several dimensions to evaluate before committing to any acquisition: Size of book of business: The first acquisition should be smaller than your current operation. This lets you test your processes without overwhelming your capacity. Once comfortable, you can scale up to targets that are two or three times your current size, though Ron cautioned against letting ambition outpace capability.

Tech stack compatibility: You should only acquire what you can fulfil. Ron is strictly WordPress. If a target brings Drupal, static HTML, or Shopify clients, Ron declines unless the plan is to migrate them to WordPress (which he will do, but at a project cost). The point is that acquiring unfamiliar tech creates hiring, training, or white-labelling overhead that changes the economics.

Services offered: Hosting and maintenance (care) plans are far easier to roll up than marketing retainers involving SEO or PPC. The latter require ongoing strategy, reporting, and specialised team members. If acquiring an agency that offers services you don't currently provide, you need to decide in advance whether to absorb the team, white-label, contract out, or hire. Each option changes your cost basis.

Hourly rate and retainer pricing: If the acquired agency's rates are lower than yours, you have a choice: honour the old pricing (Ron always does, for two years), bump clients up immediately (risky, creates churn), or create a transition period. If their rates are higher, it's easy, keep those rates as-is.

Geography and local dependency: The majority of Ron's acquisitions are non-local (throughout the US, not just Chicagoland). This is generally fine in the post-COVID landscape of Zoom-based client relationships. However, if a client's relationship with an agency was built on in-person proximity, that client may churn when they discover the new provider is remote. This is a known risk and worth investigating during due diligence.

Exchange rates: Ron specifically called this out as a pain point, noting a Canadian partner relationship has made exchange rate management an ongoing headache. His current policy is to only pursue US-based deals.

Seller motivation: Good sellers are not purely motivated by money. They have often built relationships with their clients over years and are concerned about what happens to those clients after they exit. Understanding and respecting this concern is both an ethical responsibility and a practical advantage: a seller who trusts you will do a better job transitioning their clients to you, which reduces churn.

Client characteristics: Does the acquired agency serve a niche? Are those clients the same type you already serve? Are they geographically concentrated? Do they have a history of loyalty to their provider, or do they tend to shop around? Are they technically literate enough to handle a smooth transition?

Sourcing Deals

Ron identified three primary channels for finding acquisition targets: Networking: His most productive channel, and the most ironic given his introverted nature.

By being present in the WordPress and web agency community, attending summits like this one, WordCamps, and other events, people come to know that Ron buys agencies. When someone is ready to sell or knows someone who is, Ron gets the call. He noted that events like this summit create lower-guard environments where candid conversations about selling happen naturally.

Online marketplaces: Flippa and Buy Biz Sell are the main platforms he referenced. He was candid that there is a lot of low-quality inventory on these platforms: one-to-two-year-old agencies, template-based "ready to go" businesses with no real client base, or outright shady listings. That said, Prism came from Flippa, so it is worth monitoring. The key is rigorous filtering and asking the right questions before due diligence.

Strategic partners: If your agency is strong in one area (say, SEO) and weak in another (web design), acquiring or merging with a complementary agency gives you both expanded service capability and an immediate book of business. This is an often-overlooked approach that can produce synergies on both sides.

On the topic of outbound outreach, Ron was explicit: he has never successfully approached an agency owner cold and converted them into a seller. He compared it to knocking on someone's door and asking if they want to sell their house. The emotional and financial readiness required to sell a business is not something that can be created by a cold email.

Even if an outreach message starts someone thinking, it could be years before they are ready to act. Ron therefore does not invest energy in outbound acquisition prospecting and relies instead on being known in the community.

Deal Structures in Detail

Ron described several deal structures, ranging from most seller-friendly to most buyer-friendly: 100% upfront cash: The seller gets everything immediately and faces no risk of non-payment. The buyer, however, takes all the risk: if key clients churn immediately, the buyer has already paid full price for a smaller book. Ron did this with Prism and considers it his most expensive mistake. He no longer does upfront deals.

Seller financing: A hybrid where the buyer pays a portion upfront (Ron's example was 50%) and the remainder is financed by the seller over 12 or 24 months, with interest. This is described as a mutually shared risk model: the seller gets some cash immediately and a payment stream, while the buyer reduces the up-front outlay. Ron used this structure for New Paradigm.

Revenue-share earnout (Ron's current standard): Zero dollars upfront. The buyer takes over all expenses, billing, and client relationships from day one and pays the seller a percentage of the gross revenue that book of business generates each month, over 24 months. Ron's typical payout is 80-90% of net monthly revenue (gross revenue minus the cost of servicing those accounts). In some cases he has agreed to 100%.

The earnout model works as follows in Ron's example: if a book of business generates $10,000 MRR, and the monthly cost to service those accounts (hosting, SaaS tools, plugins, etc.) is $2,000, the net is $8,000. Ron pays 80-90% of that $8,000 to the seller each month for 24 months. If clients churn, the payout shrinks accordingly, which protects the buyer.

The seller is incentivised to ensure a smooth transition so clients stay and the monthly payments remain high.

Ron acknowledged that this structure puts more risk on the seller than the buyer. He is transparent about this and invests time in educating sellers on how M&A works, since most sellers have never sold a business before and may not know anyone who has. This education is part of the deal-making process.

Evaluating a Deal: Red Flags and Green Flags

During the Q&A, the audience pushed Ron to articulate what tips a deal toward "walk away"

versus "move forward."

Red flags:

• A single large client representing the majority of MRR. If that client leaves, the economics collapse. Ron experienced this directly: he acquired an agency where one client paying $3,300/month in SEO retainer was the dominant revenue source. That client became extremely difficult to manage (60 calls and 120 texts within 24 hours when Ron didn't respond immediately), had to be fired, and the book of business was left significantly underwater. Ron still has some clients from that acquisition but has never recovered the investment.
• Services you cannot fulfil. If acquiring an agency doing SEO retainers but you have no SEO capability, you face an immediate hiring or outsourcing challenge that changes your cost structure.
• Client bases that require in-person relationships, especially if you are not local.
• A book of business where client sites look old and neglected. While this can be positioned as an upsell opportunity, it can also signal dissatisfied clients who are likely to churn.

Green flags: - An agency with clean, modern client sites and a well-presented agency brand.

This indicates clients are reasonably well-served and likely to stay through a transition.

• Services fully within your current fulfilment capability (for Ron: hosting and care).
• A seller who is genuinely motivated by legacy and client welfare, not just extracting maximum cash.
• A book of business with many small clients rather than one or two dominant accounts.

Diversified revenue is more resilient.

Ron's general heuristic: if it feels too complex, it probably is. He advocates applying sales judgement here: would you want to have a beer with this seller? Do you speak the same

language? Compatibility between buyer and seller often predicts compatibility between the buyer and the acquired clients.

- Client bases that require in-person relationships, especially if you are not local.

Onboarding Clients at Scale

One of the most practically detailed sections of the session covered what happens after a deal closes. Acquiring 10, 20, or 50 clients at once is fundamentally different from onboarding one or two. Ron described the post-close period as "speed dating" because you are suddenly in rapid succession meetings and calls with a large group of people who are adjusting to a new provider.

Automations: Ron's team has built automation workflows so that adding a new client to their system (HubSpot, Google Drive folder creation, time-tracking setup, etc.) requires only a form submission, not manual recreation of each step. At scale, saving 15 minutes per client across 50 clients saves hours of work.

Email templates and snippets: Most clients ask the same questions. Having pre-written templates or snippets for the most common communications saves significant time and ensures consistency of tone and information.

Billing systems: The billing platform needs to look professional and work reliably. A clunky or amateurish billing experience undermines client confidence at the most critical moment.

Website migration: Ron's team averages approximately two hours per site for migration, QA, and technical handover. At scale, this alone is a significant resource commitment. Early in his acquisition history, Ron did all migrations himself, working through them five to ten per day for one to two weeks after a deal closed.

Upsell and cross-sell opportunities: A newly acquired book of business is full of opportunity the previous owner may not have pursued. Ron's specific example: when onboarding a new client, he checks how old their website is. Knowing that most clients rebuild their site every four to seven years, he plants the seed in the onboarding call, even if the client is not ready to act immediately. This creates a pipeline of future project revenue.

He applies the same lens to SEO, PPC, privacy policies, and other services.

AI in the onboarding process: Ron explicitly stated he does not use AI in the acquisition or onboarding process to any significant degree. The relationships and decisions involved are too sensitive. He allows for some automated research but keeps human judgement at the centre.

Lessons Learned from 14-15 Acquisitions

Ron condensed his key learnings into several principles: The triple-win scenario is non-negotiable. Every deal must produce a good outcome for the buyer, the seller, and the clients. Compromising any of those three outcomes creates downstream problems that are much harder to fix than walking away from a marginal deal.

Build relationships, not just transactions. The deal is not just with the seller. It is with every client in that book of business. Taking the time to make each client feel welcome and cared for after the transition dramatically reduces churn.

Know the work involved before you commit. Acquisitions are not passive income from day one. The onboarding phase is intensive and requires real time and resource allocation, even if you have a team.

Start small. Ron's first acquisition was eight clients. Starting with a fifty-client book would have been overwhelming. The learning curve is steep enough without also managing scale.

Risk tolerance must match deal structure. No acquisition is risk-free. Even the earnout model involves real costs: taking over expenses, doing the migration work, managing client communication. Know what you are taking on.

Don't overextend. "Make sure your eyes aren't too big for your stomach" was how Ron phrased it. Aggressive targets are fine as long as the fulfilment capacity is genuinely there.

Over-communicate with clients post-close. Be friendly, responsive, and transparent.

Answer every question even if you have answered it ten times already. This is the moment when the trust transfer either happens or doesn't.

Lock in pricing for two years. This single policy has prevented enormous amounts of churn across Ron's acquisitions. Clients are already absorbing the change in provider.

Adding a price increase on top of that is a reason to leave. Removing that variable from the equation buys goodwill and time.

The six-figure up-front deal was a six-figure education. Ron was direct about this.

Buying an agency outright in cash is the riskiest structure for a buyer. He will not do it again.

Have a team. Founders who try to do everything themselves will burn out. Ron has burned out multiple times. As the acquisition strategy scales, having a team to fulfil onboarding, migrations, and ongoing client service is essential.

Deal Sourcing: Personal vs. Company Brand

An audience question raised the issue of whether to approach acquisitions as an individual or as the agency. Ron's answer was nuanced:

He leads with the company (Cyber Optic) because the company is what does the fulfilling, and he has built high standards into the operation. He is not going to be the person handling every client interaction personally. The team is.

However, he acknowledged that the right choice depends on context. If you are the CEO of a well-known agency, your personal credibility may carry more weight than the company brand. If you plan to run the acquired book of business under a separate brand rather than rolling it into your existing company, the answer changes again.

Ron noted that he has recently moved most of the acquisition-focused content off Cyber Optic's website and onto a personal site (ronjonson.net, acquired for $100 because he could not get the.com), signalling that he is beginning to build a separate identity around the acquisition activity.

He also confirmed that all of his acquisitions have been rolled into the Cyber Optic brand.

He does not operate acquired books of business as separate entities.

If you are the CEO of a well-known agency, your personal credibility may carry more weight than the company brand.

Preparing Your Agency to Be Acquired

An audience member asked when to start preparing if you want to eventually sell your agency. Ron's answer was simple and aligned with other advice given throughout the summit: start now, by running your agency better.

Specific preparation includes:

• Removing yourself as the single point of failure. If the business depends entirely on you, a buyer will discount the price or walk away.
• Building SOPs for all key processes. Documentation makes the business transferable and demonstrates maturity to a potential acquirer.
• Hiring and delegating so the operation runs without the founder in the room.
• Creating consistent, repeatable service delivery.
• Generating stable MRR, since that is what acquirers value most.

Ron observed that the advice for becoming an attractive acquisition target is identical to the advice for building a scalable, resilient agency. They are the same goal.

The Future of Web Agencies: Ron's View

Stephanie asked Ron where he sees web agencies in two years. His assessment was grounded and somewhat cautionary: Recession risk: Ron believes there is a meaningful probability of a recession in the near term, and agencies that have not built strong MRR foundations will struggle. Project-based revenue is the first thing clients cut.

AI's real impact: Ron was balanced on AI. He cited an observation attributed to a company called Tobin (which works in agency acquisitions) that AI is not showing up dramatically in the numbers of higher-level agencies. It has become "table stakes" for productivity but is not a transformative force at the upper end of the market. His memorable quote on AI: "a fool with a tool is still a fool." AI is enabling low-quality operators to produce more low-quality work faster. For skilled practitioners, it is a genuine force multiplier that makes them more productive without replacing their judgement.

Agency structure: Ron expects agencies to become smaller and more nimble. AI reduces the need for headcount bloat. The agencies that survive will be those that use AI selectively and intelligently while maintaining high service standards. Agencies at the low end that are easily replaceable by AI-generated outputs or commodity services will face existential pressure.

The silver wave: Baby boomers who own agencies are retiring, and AI anxiety is causing some smaller operators to exit earlier than they otherwise might. This is creating a supply of acquisition targets that Ron expects to persist for the next one to two years.

Pricing AI-assisted work: Ron and Stephanie briefly discussed the thorny question of how to bill for work that used to take six hours and now takes two minutes with AI assistance.

Ron's position: do not charge for two minutes, but do not charge the full six-hour rate either. The value-delivered argument is valid (the same expertise went into the prompt and the QA as into the traditional process), but there is a practical and reputational ceiling to how aggressively you can apply it. He acknowledged there is no clean answer and that the industry is still working it out.

About the speaker Ron Jonson CyberOptik

Ron Jonson is with CyberOptik, an agency with experience on both sides of agency acquisitions, buying and integrating other agencies to grow recurring revenue.