If you want to sell your online business or digital agency one day, you have to first know:
How big buyers actually think
What buyers look for in a digital agency
And how you can increase your agency valuation
… so it’s not just an asset that brings in cash flow but one that can pay you 2-3x your annual profit if you do decide to exit in the future.
That’s why in this episode of the Digital Investor Podcast, I’m sitting down with Dom Wells, founder and CEO of Onfolio, a NASDAQ-listed company that acquires online businesses and digital agencies.
He’s going to share what large buyers actually look for when acquiring digital agencies, why digital agencies have become so attractive (especially over the next 2-3 years), and what separates online businesses that are easy to buy from those that struggle to exit?
Watch the video, or read the article below, to get Dom’s insights and advice.
From Amazon Affiliate Sites to NASDAQ: Dom’s Journey
Dom’s story starts like so many others in our community. After discovering internet marketing through The 4-Hour Work Week, he began building Amazon affiliate sites in 2012. The early days were filled with the usual struggles—rudimentary keyword research, learning SEO, and slowly grinding his way to his first $500 per month, then $1,000.
By late 2014, he’d spotted an opportunity on Flippa. While the quality of turnkey websites being sold was questionable, the demand was clearly there. So he launched Human Proof Designs, offering done-for-you niche websites that were actually quality builds.
“We would research niches, package these done-for-you websites up… someone would come along and be like, okay, yeah, I like the sound of that. I’m going to buy it.”
Without realising it at the time, Dom had built his first agency. He scaled Human Proof Designs to $1.1 million in annual revenue with around $200,000 in profit before selling in 2019. But here’s where it gets interesting for anyone building a digital agency today.
From Flipping Small Sites to Selling Established Online Assets
Despite the outward success, Dom was burning out. Revenue was growing, but profits weren’t keeping pace. His team had ballooned from three people to seven or eight core staff, plus around 300 Upwork contractors. Feast-and-famine months meant constant stress about making payroll.
Sound familiar? This is the reality for many agency owners I speak with.
The turning point came at a high-level conference where Dom felt like “the dumbest, least successful, poorest person there.” But instead of being discouraged, he was inspired. He saw people who had sold businesses for $300 million or built incredible wealth without burning themselves out.
At the same time, using Ryan Levesque’s Ask Method, Dom discovered a gap in his market. His audience didn’t just want starter websites—they wanted to buy businesses already making money. They had $100,000 to invest and wanted something generating $4,000 per month.
This insight, combined with his own success flipping a $40,000 website purchase into an $80,000 sale, sparked the idea for OnFolio.
If you’re interested in learning how to build, buy, and sell digital assets like Dom has done, our Digital Investors Program teaches you the exact skills needed to create valuable online businesses that attract buyers—whether you’re building agencies, content sites, or other digital assets.
What OnFolio Looks For When Acquiring Digital Agencies
Now let’s get into the tactical gold. OnFolio has made agencies a core focus, with four of their last five acquisitions being digital agencies. Here’s exactly what Dom and his team evaluate when they’re looking to acquire.
Size and Profitability Thresholds
OnFolio typically targets agencies with $500,000 to $1 million in annual profit (EBITDA). At these levels, the business can support hiring a CEO or management team to replace the founder—which is critical because most founders want to move on.
They’ve paid between 3x to 4x EBITDA for agencies, meaning a business netting $500,000 annually might sell for $1.5 to $2 million.
That said, they have acquired smaller agencies opportunistically. Their most recent smaller acquisition was doing $200,000 in profit and sold for $600,000—but only because it could be tucked into an existing portfolio company and run by teams they already had in place.
Recurring Revenue is King
Dom broke down revenue types in order of attractiveness:
- Contracted recurring revenue – Monthly automatic payments under contract (most valuable)
- Non-contracted recurring revenue – Regular monthly payments without formal contracts
- Reoccurring revenue – Clients who come back multiple times per year
- One-time payments – Project-based work (least valuable)
The more predictable and recurring your revenue, the higher the multiple you can command when you sell your digital agency.
Revenue Sustainability and Stability
Buyers are wary of hockey-stick growth that can’t be explained or sustained. Dom shared a common scenario:
“Sometimes you have a business that’s grown really quickly. And someone’s like, hey, this business made a million dollars last year, I want four million for it. And I’m like, but the year before that, it made 100k.”
This was particularly challenging during 2023 when many businesses had caught “lightning in a bottle” during COVID and were slowly declining. Buyers want to see consistent performance over time, not a spike they can’t trust will continue.
Client Concentration Risk
If one client represents a significant chunk of your revenue, that’s a major red flag. Losing that single client could devastate the business. Sophisticated buyers will discount their offer—or walk away entirely—if client concentration is too high.
Diversifying your client base before you sell is one of the most valuable things you can do to maximise your exit price.
Founder Dependency
This is where most agency owners fall short. Dom described a common scenario that kills deals:
“Someone has a good social media profile… they started selling a service on that profile. And then that’s basically the business. They’ll argue like, ‘Oh, my team does all the work, I don’t really do anything, I just post three times a week on social.’ And basically, that’s actually a really difficult business to buy, because unless they’re coming with it, that’s actually all the business is—it’s like a social media account and a spreadsheet.”
To command premium valuations, you need a sales process that doesn’t rely solely on the founder, lead generation systems that work without you, team members who can handle client relationships, and documented processes for delivery and operations.
Clear Growth Levers
Surprisingly, most agency owners don’t actually know what’s driving their growth. They’re doing everything—LinkedIn, Facebook ads, cold email, conferences, marketplace listings—but can’t identify which channels are actually working.
Buyers want to see a clear, replicable growth playbook. If you can demonstrate exactly how you acquire clients and what the cost per acquisition is, you become far more attractive.
“Having a real handle on what the actual levers are for growth is pretty important. And surprisingly, most people don’t actually know.”
Healthy Margins
While buyers can sometimes see opportunity in improving below-average margins, you’re generally better off having strong margins before you sell. A buyer might think, “Great, I can find 10% improvement here,” but they might also think, “This is a below-average business.”
Don’t leave margin improvement as the buyer’s opportunity—capture that value yourself before you exit.
Common Mistakes That Kill Agency Deals
Beyond simply lacking the positive attributes above, Dom highlighted several specific mistakes that tank agency valuations when owners try to sell their digital agency.
Messy Books and Deferred Revenue
Many agencies sell large upfront projects but recognise all the revenue immediately, even though they’ll be fulfilling the work over six months. This creates a distorted picture of profitability.
“They might sell a project for 150K all upfront, but it’s a six-month project. And so we might be like, ‘Oh hey, this business made 150K this month,’ but it turns out, well, no, actually it kind of was break-even because you’re going to be fulfilling that work over the next six months and you’re not getting paid for it.”
Clean, accurate financial records that properly account for deferred revenue are essential.
Hidden Cash Flow Problems
Dom revealed something most sellers won’t admit:
“A lot of agency owners sell, and they don’t really say this and they maybe don’t even know this, but they’re looking for a liquidity backstop.”
Those months where you’re scrambling to make payroll? Buyers can often detect this stress in the business. Having a parent company that can provide short-term funding is actually attractive to some founders—but it also means the buyer knows you might be selling from a position of weakness.
Scaling Through Brute Force
Many agencies can muscle their way to $1-2 million in revenue through sheer hustle. But then they stagnate because they haven’t built real systems.
“You can scale to a million in revenue, maybe even two million in revenue just through brute force. And then you stagnate and you’re like, I don’t know how to grow it. I’ve been trying to grow it for two years. I think I’m done.”
The agencies that command higher multiples are the ones that have figured out scalable, repeatable systems—and that usually means they’re bigger simply because those systems enabled continued growth.
Why Digital Agencies Are Attractive Right Now
Dom shared an important insight about market timing for those looking to grow an online business. During 2023 and 2024, agencies became some of the best acquisition opportunities precisely because other buyers avoided them.
“Agencies were some of the best businesses that you could acquire because no one was buying them. So we could pay less for them and we could structure it in a way where we paid less cash upfront… The reason people are paying less for them is no one wants to buy agencies because no one wants to run agencies.”
But OnFolio’s advantage is that they know how to run agencies. They understand the operational challenges and aren’t scared off by the perceived difficulties. This is a crucial lesson: understanding operations creates acquisition opportunities.
Should Founders Stay or Go After Selling?
Most agency founders want to move on—that’s often why they’re selling in the first place. They’re tired, stuck on growth, or ready for their next venture. Dom is fine with this, as long as the business has the systems and team to continue without them.
But he also highlighted the opportunity for founders who want to stay:
“You might sell your business for $1 million and retain 10%. But then if everything goes well… private equity will flip the business in 10 years for $100 million, so your 10% is going to be worth more than the entire thing.”
OnFolio has acquired businesses where founders stayed on, retaining 10-20% equity while benefiting from corporate resources, funding, and the security of a “liquidity backstop.” For the right founder, this can be the best of both worlds—a cash-out moment plus continued upside.
Key Takeaways for Agency Owners Planning an Exit
If you’re building a digital agency with an eventual sale in mind, here’s what to focus on:
- Build recurring revenue – Move away from one-off projects toward monthly retainers or contracted services
- Diversify your client base – No single client should represent more than 15-20% of revenue
- Remove yourself from operations – Document processes, build teams, create systems that work without you
- Know your growth levers – Understand exactly which marketing channels drive client acquisition
- Clean up your books – Properly account for deferred revenue and maintain pristine financial records
- Think about selling before you want to sell – The best exits are planned years in advance
Dom and OnFolio are actively looking for agencies to acquire. If you’ve built something substantial and are thinking about your next chapter, you can reach out through OnFolio’s website or contact me here at eBusiness Institute for a personal introduction.
The opportunity to build valuable digital assets—whether agencies, content sites, or other online businesses—has never been greater. Understanding what buyers want is the first step to building something truly valuable.
How To Start Building A Digital Agency or Online Business
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This article should not form the basis of an investment decision. This is not a recommendation or endorsement to invest in Onfolio nor is it financial advice. This is merely an educational style interview with the founder of Onfolio so they can explain what they do and how they operate. Assume we have not done due diligence on Onfolio nor have we independently verified any statements made in the course of this interview. You must do your own due diligence and seek independent financial advice before acting on anything mentioned in this interview. We receive no affiliate commissions or incentives from Onfolio. Links in this article are not affiliate links.
