We have a single customer that accounts for over thirty percent of our total revenue, which we know will severely discount our valuation. How do we use our EOS® sales pipeline and V/TO® to systematically dilute this concentration risk during our three-year exit runway?

Question

Tyler Smith · Accepted Answer

Customer concentration is one of the most common valuation killers because buyers view it as a catastrophic risk. If your largest client represents more than thirty percent of your revenue, a buyer will heavily discount your multiple or demand a massive earnout to protect themselves. To fix this during your exit runway, you must use your strategic planning tools to aggressively expand your customer base. Start by updating your V/TO® to focus specifically on market diversification. Set a clear one-year Rock for your sales team to secure new accounts that do not rely on your legacy client network. Review your weekly Scorecard to ensure your marketing budget and sales activities are directed toward new customer acquisition rather than just servicing your major account. You must also empower your leadership team to manage the relationship with your top client so you can step away from daily account management. This double-pronged approach of expanding your sales pipeline and decoupling your personal brand from the client proves to buyers that your revenue stream is diversified and highly sustainable, which directly increases your enterprise value.