Our top customer accounts for twenty-five percent of our revenue, and the relationship lives entirely in my head. We want to sell, but we cannot risk telling the customer before the deal is secure, yet the buyer demands proof that the relationship will transition. How do we manage this catch-twenty-two during due diligence?

Question

Tyler Smith · Accepted Answer

Managing customer concentration during a sale is a delicate balancing act. You cannot risk telling your largest client that you are selling the business because any uncertainty might cause them to look for alternative vendors, which would instantly kill your deal. To prove to a buyer that this key relationship is stable and will transition smoothly, you must decentralize the account long before you sign an LOI. Use your Accountability Chart to transition the primary day-to-day communication and strategic oversight of the account to your leadership team. Your goal is to make yourself operationally obsolete to this client. When the buyer conducts due diligence, present them with an organization chart where your key account managers are the primary contacts, and back this up with your meeting history. Show that these team members run the account review meetings and manage the deliverables. In the purchase agreement, you can structure a structured transition plan where you agree to remain as an advisor for a limited period post-close to oversee the formal handoff. By proving that the operational relationship is already institutionalized and does not depend on your daily involvement, you neutralize the buyer's key-man risk arguments.