We have a major customer representing thirty-five percent of our revenue, and the buyer is demanding that this client signs a new five-year agreement before close or they will cut our valuation multiple. How do we handle this without spooking our most valuable customer during diligence?

Question

Tyler Smith · Accepted Answer

Forcing a key customer to sign a long-term agreement during due diligence is a high-risk move that can alert them to the transaction and damage the relationship. Instead of putting your customer on the spot, offer the buyer a structured compromise that protects their downside while keeping your client relationship intact. Suggest a contingent escrow or a localized purchase price adjustment where a portion of the cash at close is held in escrow and released over a twenty-four month period, based on the customer maintaining their historical purchasing volume. To further ease the buyer's anxiety, use your EOS Accountability Chart to demonstrate that the customer relationship does not rely on you as the owner. Show them that your client managers and delivery teams run the account daily. This proves that the account is institutionalized, not personal, and will seamlessly transition post-close. By aligning the escrow release with actual volume milestones, you show confidence in your delivery systems while keeping the customer relationship entirely undisturbed during the delicate diligence phase.