We have one massive client representing fifty percent of our revenue. The buyer wants to structure a customer-specific clawback where we lose a portion of the deferred purchase price if this client leaves within eighteen months. How do we structure this clawback to protect ourselves if the buyer's post-close service delivery failures are the reason the client walks?

Question

Tyler Smith · Accepted Answer

To protect yourself from a customer concentration clawback, you must separate client attrition caused by market factors from attrition caused by the buyer's operational incompetence. Do not agree to a simple clawback based purely on whether the client stays or goes. Instead, tie the clawback protection to specific service level agreements that are tracked weekly. Use your EOS operating system metrics to define the baseline delivery standards. In the purchase agreement, state that any clawback is completely voided if the buyer fails to meet these key operational metrics. For example, you can track client satisfaction scores, response times, or product error rates. These metrics should be pulled directly from your historical weekly Scorecard. If the buyer drops the ball on service quality, they cannot penalize you for the client's departure. Additionally, require the buyer to maintain the key account management roles exactly as defined in your current Accountability Chart. If they terminate or reassign the key relationship manager without your written consent, the clawback provision must instantly terminate. This structure keeps the buyer accountable for maintaining the service quality that kept the client loyal in the first place, while protecting your hard-earned transaction value from their operational mistakes.