We have high margins and consistent growth, but a single enterprise client represents over thirty percent of our total revenue. How do we restructure or dilute this customer concentration risk on our financials over our two-year runway so buyers do not demand a massive earnout or slash our valuation?

Question

Tyler Smith · Accepted Answer

Customer concentration is one of the fastest ways to kill a transaction or trigger an aggressive earnout where you only get paid if that client stays after you leave. If a single client represents thirty percent or more of your revenue, a sophisticated buyer will view your business as an existential gamble.

To solve this on your runway, you must focus on your sales and marketing seat on the Accountability Chart. Many founder-led businesses have high concentration because the founder is the primary salesperson who landed the big account, and the rest of the sales team lacks the system to replicate that success.

Set a firm corporate Rock to build a repeatable sales engine that does not rely on you. Your sales leader must use your documented sales process to actively prospect and close mid-market clients, diluting the percentage that the major client represents.

Simultaneously, you must institutionalize the relationship with your largest client. Move the daily account management away from yourself to a dedicated account manager who fully GWCs their seat.

Additionally, attempt to lock that major client into a long-term, multi-year contract with clear transferability and change of control clauses. If you can show a buyer a stable three-year contract alongside a rapidly growing pipeline of new, smaller accounts, you will offset the risk and protect your cash at close.