You’re the owner of a website hosting company and you’ve been seeing your industry change dramatically as AI becomes more powerful and prevalent. Maybe you’ve been worried about how these changes (real or imagined) might impact the value of your company.
Perhaps you’ve even been thinking about exiting the industry and are considering if now is the right time to sell and how much AI will impact the actual valuation.
In this article, we’ll investigate exactly how AI is affecting valuations. If you’re more interested in the process of selling your hosting company, you can read our full guide here.
Overview: Good News & Bad News
I’ve got some good news and some bad news, and which applies to you depends on how your business is operated.
First, the bad news.
If your business focuses mostly on brochure-type sites and operates as a commodity doing cheap, easy fixes or builds; AI is going to continue eating away at your business and your valuation will be greatly affected.
But there is good news, too!
If you’ve focused on premium, ongoing services like quality hosting and maintenance plans and positioned yourselves as specialists, your company is still in a very strong position to achieve high valuations if you were to sell.
The AI Shakeup
You don’t need me to tell you that the industry is changing. As of early 2026, Wix, Squarespace, GoDaddy, etc. all provide AI website builder tools. What used to take a team of coders and designers weeks to build might now take these tools mere minutes.
Most of your clients could have their own site built for almost nothing, and a large chunk of actual development can now be done entirely by AI.
Understandably, many are worried across almost every industry but especially within tech and the website space.
As the owner of a website hosting company, you must be asking the question, “will my company be worth anything in a year or two?”
AI Brings Uncertainty to the Industry
No matter what people say, nobody can predict the future with any certainty. We have no way of knowing how things are actually going to play out.
The truth is that AI could be a huge boost to the industry or it could be devastating. Knowing this, potential buyers of hosting companies may be wary and unwilling to provide premium multiples for valuation.
Particularly in the WordPress space, there are multiple possibilities for the industry to shrink dramatically. While unlikely, AI could potentially disrupt the website industry to such an extent that websites aren’t even needed anymore. It could obviate the need for a CMS like WordPress entirely.
These possibilities create risk, and risk absolutely gets factored into any valuation.
Fortunately, I think these possibilities are fairly remote, at least in the near term. But they do represent a tail risk that buyers will factor into their valuations, leading to a lower multiple.
Furthermore, in face of such uncertainty, some buyers may choose to exit the industry entirely. Fewer buyers means less demand, and less demand means that buyers will be in a position to close deals with lower multiples.
The buyers that do stick around are doing far more diligence. They are more selective and are typically looking only for sellers with a portfolio that aligns strongly with their goals. They’ll be prioritizing recurring revenue and retention over all else.
We’re already seeing more sellers enter the market overall and buyers are able to be more selective as a result.
The Big Win: Businesses That Provide Specialized, Premium Recurring Services Will Thrive
Even without AI, the industry has been moving in a direction for some time where the more specialized, expertise-driven agencies tend to succeed. Globalization has meant that anyone anywhere can hire a team from Asia for a very low rate to outsource their website design and development for basic, brochure-like sites.
Businesses that depend on building basic websites for $1500 have been struggling for years as their service becomes a global commodity.
The sweet spot is for businesses that have cultivated a client list of non-technical clients that value expertise more than anything. They want to know that a real person is handling their website and can deal with any issues that arise. Someone to explain ideas to them and go over the pros and cons of solutions. Someone to just make sure it works.
They don’t have time to fiddle with AI or mess with code or anything else. They want a provider that can do things AI cannot.
These types of businesses continue to be extremely well-positioned in the market and, as such, can demand higher multiples when it comes time to sell.
The right buyers know exactly what they are looking for and know what drives value. They are willing to pay a premium for it, even in the current market.
Just like us, the majority of buyers in this space are already providing similar services themselves, and are looking to add to their existing client base. The best fit for them is businesses that provide services and offerings similar to their own. They want to purchase companies that already have a strong list of clients and services who depend on their expertise and abilities far beyond what AI can provide.
So what’s a realistic multiple?
How hosting companies are typically valued
These types of acquisitions typically anchor their offers against a single metric: annualized recurring revenue. It’s basically your total recurring revenue for the year. Offers are typically calculated using a multiple of that value, such as 1x.
I would say that anything within about 0.5x to 2x or even more is within the realm of possibility for most small business acquisitions. In normal times, 1x has traditionally been the starting point, and then it goes up or down from there depending on the strength of the selling business and fit for the buyer. Weak businesses are likely to drift below that, while very strong businesses with a solid list of clients and great track record is likely to go higher.
My company, for example, has acquired hosting companies for anywhere from 1x to 1.5x just within the last handful of years.
I would suggest that these are the likely ranges you could expect to get in offers for your business given the current climate:
Low Value
- Businesses that provide more of a commodity as a service (basic hosting, brochure sites, no consulting or ongoing value-add services beyond hosting)
- Typically have little to no specialization of any kind
- Low ARR per client (often less than $500/year/client)
- Easily replaced by AI
I expect such businesses to get offers in the 0.5x to 1.0x ARR range. If things are particularly chaotic or they are already clearly losing a lot of clients, they may be worth even less.
High Value
- Businesses that provide strong ongoing services on top of their hosting
- Typically provide “managed” hosting and additional, related services
- Have strong relationships with their clients
- Often specialized in an industry
- Typically higher ARR per client (often $800-1000 or more per client per year recurring)
- Difficult to replace with AI
For these types of high-value hosting companies, I would expect offers anywhere from 1.0x to 1.6x ARR, even now with the advent of AI. They typically have successful clients who are not interested in gambles with AI just to save a few bucks. They value the expertise you bring to the table.
Unicorn
These are very rare businesses that can command a considerably higher ARR that usual. These don’t come along often, and if you own one you probably already know it.
- Very strong ongoing services for all clients
- Often extremely niche industries
- Typically have very high profit margins on their services
- Tend to be a bit larger than most small hosts (frequently $1 million+ in ARR)
- Rely heavily on established processes and function like well-oiled machines
- Often a turn-key business that runs itself, requiring the new owners to simply purchase and start
If you are the owner of one of these types of businesses, you are in luck. While I haven’t personally dealt with an acquisition of this type before, I would expect these kinds of hosts to command extremely-high offers with ARR multiples of 2x-4x ARR from the right buyers. Clients of these types of companies are often locked-in to multi-year contracts or in industries that change so slowly that future revenues are very likely to remain stable. This kind of low-risk investment is very attractive to the right buyer with deep pockets.
Should I wait to sell?
Listen, it’s entirely possible that regulation, environmental concerns, or the unsustainability of the business model due to high infrastructure and energy costs will lead to the death of AI and any related fears will prove to be nonsense. It’s also possible that AI will change the game to such an extent that essentially all modern tech (including websites) are obviated.
While I think both outcomes are unlikely in the near- or mid-term, the fact is that we don’t know for sure.
I’m not bullish enough on website hosting to think that sales prices will actually increase across the whole industry. I think that’s exceedingly unlikely.
I’d say that if you are at all worried about the future of AI and its impact on website hosting and maintenance, it’s likely best to sell soon rather than trying to wait it out. Prices are unlikely to go up, but there’s a strong chance they will go down.
If you’re providing quality, expert services to your clients, you’ll be more insulated. But still affected.
If you’re actively considering selling, by the way, I go into more detail on how that process works and what to expect here.
One thing to keep in mind is that you’ll want to ensure your business isn’t just surviving but actually thriving at the time when you sell it. Buyers want to see that their new acquisition was already growing when they bought it.
So if you’re planning to wait it out, the question becomes, “can you keep your business thriving enough to be able to sell it later?”
Conclusion: Well-Positioned Agencies are still Positioned for Success, but You Might Want to Sell Soon
At the end of the day, nobody knows the future. Much of this is speculative. Much of it is based on what I’m already seeing in the industry.
Things are likely to remain great for well-positioned agencies with quality, managed services. At the moment, you can still expect fairly high offers on your business should you choose to sell.
If you’re currently offering mostly basic services that can easily be replaced by AI, you may want to consider shifting your strategy dramatically or exiting the industry entirely.
We’ve been in the industry since 2011 (fifteen years as of the time of this writing) and have been acquiring other website hosts since 2018. We’ve been very active in the industry since then and have made a handful of migrations and many more offers.
If you’re at all interested in speaking with us about selling your website hosting company or clients, please visit our page on that and reach out. We can take a look at your business and give you a realistic valuation range based on your current clients and services.
