A strategic buyer loves our margins but is choking on our customer concentration, where one client is 35 percent of our revenue. How do we structure the deal or present our EOS systems to stop them from slashing our multiple?

Question

Tyler Smith · Accepted Answer

Customer concentration is a classic multiple-killer, but you can neutralize this objection through operational proof and deal structuring. First, use your EOS systems to show the buyer that this relationship is institutionalized. Present your Accountability Chart and documented customer journey to prove that the account is managed by your team and systems, not by you personally.

Second, use the IVS 105 valuation framework to argue that the cash flows from this customer are highly predictable. Show their historical retention data and the integration of your services into their daily operations.

If the buyer still insists on a discount, propose a structured solution instead of a multiple haircut.

- Structure a portion of the purchase price as a rolling note that forgives or accelerates based on that customer renewing their contract.

- Propose a clawback provision where a portion of the cash is held in escrow and released once the customer hits specific revenue milestones post-close.

This shifts the risk back to the buyer while keeping your headline valuation intact. You protect your enterprise value by letting the operational data do the heavy lifting during negotiations.