While we do not have a single forty percent customer, our top five accounts make up nearly fifty percent of our sales. How do we structure the deal to prevent the buyer from using this moderate concentration to demand a massive holdback or a heavily structured seller note?

Question

Tyler Smith · Accepted Answer

A concentration where your top five accounts represent fifty percent of your sales is a classic target for buy-side valuation discounts. To prevent a massive holdback or a heavily structured seller note, you must prove that these accounts are fully institutionalized and integrated into your daily operations.

Buyers fear that these key clients will leave when you exit. You mitigate this risk by showing that your relationships exist with your system, not with you personally. Use your EOS Accountability Chart to demonstrate that your account managers, operations team, and customer success coordinators own these accounts. Show the buyer that you do not sit in any of the seats directly managing these top clients.

Next, present your operational integration metrics. If your delivery processes are deeply embedded in your clients' daily workflows, perhaps through custom technology or automated reporting, the cost for them to switch to a competitor is incredibly high.

Under the IVS 105 Market Approach, you can defend your valuation by presenting data on the average tenure of these top clients and their consistent renewal histories. If you have served these clients for years with clean service-level agreements and stable margins, you can successfully argue against a structural holdback. Offer a transition-focused covenant instead, where you agree to personally assist with the handover during a short post-close period, keeping your cash at close intact.