The shorthand vocabulary of online business acquisition — every term a buyer or seller will hear during sourcing, due diligence and closing. Definitions written from a transactional angle: what the metric means, how buyers use it, and the red flags that come with it.
A content website that monetizes by recommending third-party products and earning a commission on each sale generated. Niches like personal finance, hosting and beauty are popular. Affiliate sites are valued on traffic stability, search intent quality and program diversification — single-program dependency is the main risk during acquisition due diligence.
An e-commerce model where the seller ships inventory to Amazon, which then handles storage, packing, shipping and customer service. Buyers value FBA businesses on margin after Amazon fees (typically 30–40%), brand registry status, review count and supplier dependency. The Amazon account itself is a separable asset that must transfer cleanly at closing.
Annualized recurring revenue, equal to MRR × 12. ARR is the standard headline metric for SaaS valuation and signals the predictable, contracted revenue base. Buyers cross-check ARR against actual billings, dunning rate and contract length — inflated ARR from one-off deals or trial conversions is a common red flag during financial due diligence.
The monthly percentage of customers who cancel their subscription. A 5% churn means losing 5% of the base each month — at that rate the customer lifetime is roughly 20 months. SaaS buyers reject any deal with churn above 5–7% for SMB and above 2% for mid-market. Net revenue churn (which accounts for upsells) is the cleaner version of the metric.
A website monetized through editorial content (articles, guides, comparisons) via display ads (Mediavine, Ezoic, AdSense) or affiliate links. Margins are typically high (60–80%) because operations are light. Acquisition risk centers on organic traffic stability: a single Google update can wipe out 50% of revenue, so buyers look for diversified traffic sources and recurring email lists.
The share of visitors who complete a target action — typically a purchase. A healthy e-commerce store converts between 1% and 3%; high-intent SaaS landing pages can hit 5–10%. During due diligence, buyers compare conversion rate across traffic sources: a deal where 80% of conversions come from one channel is fragile because that channel can collapse independently of brand strength.
The systematic process of finding businesses available for acquisition. Online business buyers source deals from broker marketplaces (Empire Flippers, Dotmarket), aggregators (Flipagora), private deal flow networks and direct outreach. Strong sourcing produces high deal-to-LOI ratios; weak sourcing forces buyers to overpay on the few opportunities they actually find.
An e-commerce model where the seller doesn't hold inventory: orders are forwarded to a supplier (usually overseas) who ships directly to the customer. Margins are thin (10–20%), reliance on paid ads is heavy and supplier risk is the dominant concern. Buyers discount dropshipping multiples significantly because the moat is weak — most of the value sits in the ads account, not the brand.
The buyer's investigation period before closing, where every claim made by the seller is verified. It typically covers financials (bank statements, payment processor reports), traffic (analytics access), legal (contracts, IP), tech stack and supplier relationships. On a $100k–$1M deal expect 2–6 weeks. Findings during due diligence are the most common reason buyers renegotiate price or walk away.
A deal structure where part of the purchase price is paid over time, contingent on the business hitting agreed performance milestones post-closing (revenue, profit, customer retention). Earn-outs bridge valuation gaps when the buyer doubts the seller's projections. Typical structures: 20–40% of the price across 12–24 months. Clear, measurable triggers prevent disputes.
Earnings Before Interest, Taxes, Depreciation and Amortization — a measure of operating profitability that ignores capital structure and accounting choices. EBITDA is the dominant valuation base for mid-market and larger online businesses (typically above $1M in profit). For smaller deals, SDE is preferred because it adds back the owner's salary.
A neutral third-party account that holds the buyer's funds during the transaction. Money is released to the seller only once the asset transfer (domain, accounts, code, contracts) is verified as complete. Escrow.com is the standard provider for online business deals. Skipping escrow on a deal above $20k is a major red flag — it's how most acquisition fraud happens.
A non-binding document signed by the buyer that outlines the proposed deal terms — price, structure (cash vs. earn-out), due diligence period, exclusivity. The LOI is the trigger that locks the seller out of negotiating with other buyers, typically for 30–60 days. Most LOIs explicitly mark the price as subject to due diligence findings, leaving room for renegotiation.
Monthly recurring revenue from active subscriptions, normalized to a monthly basis (annual plans are spread). MRR is the heartbeat metric for SaaS — buyers track its month-on-month growth, net new (added vs lost) and breakdown by customer segment. Buyers value pure recurring MRR much higher than one-off revenue mixed in at the same multiple.
The ratio between the sale price and a profit metric — typically monthly net profit (a 30x multiple = 30 months of profit) or annual SDE/EBITDA. The multiple is the headline number every buyer scans first. Online business multiples in 2026 range from 24–36x monthly profit for e-commerce up to 48–72x for SaaS with strong retention. Multiple compression on a deal is often the negotiation lever.
Revenue minus every expense — cost of goods, ad spend, hosting, contractors, software, taxes. Net profit is the base on which most online business multiples are calculated. Buyers normalize the reported profit during due diligence: removing one-off items, adding back non-essential founder expenses, and adjusting owner compensation to a market salary. The normalized number is often 10–30% different from the seller's headline.
A business model where software is delivered as an online subscription rather than a one-off license. SaaS is the highest-multiple category in online business acquisitions — 48–72x monthly profit is common — because of recurring revenue, high gross margins (70–90%) and low capex. Buyers focus on retention metrics (churn, NRR) and tech debt revealed during code due diligence.
A profitability measure that adds back the owner's salary and discretionary expenses to net profit, reflecting the true cash that a single owner-operator can extract from the business. SDE is the standard valuation base for SMB online deals below $5M — Empire Flippers, FE International and Quiet Light all default to it. Above that threshold, buyers shift to EBITDA for institutional-grade analysis.
An e-commerce business built on the Shopify platform, which handles checkout, payments and hosting in exchange for a monthly fee plus transaction fees. Shopify stores are common acquisition targets — the platform standardizes inventory, orders and analytics, which makes due diligence faster. Buyers value Shopify deals on traffic source mix, returning-customer ratio and supplier dependency rather than the platform itself.
The most recent 12 rolling months, used to compute annualized revenue or profit on a current basis (as opposed to calendar year or LTM forecasts). TTM smooths out seasonality and prevents sellers from cherry-picking a single great quarter as the baseline. Buyers usually request TTM by month so they can detect declining trends inside a flat-looking yearly number.