We are preparing our business for a sale, but our largest customer represents thirty-five percent of our revenue and we cannot easily dilute their share before we go to market. How do we structure the deal or the management presentation to convince a buyer that this concentration is an asset rather than a massive risk?

Question

Tyler Smith · Accepted Answer

Customer concentration is one of the most common multiple killers in middle-market transactions, but it does not have to sink your deal if you address it head-on. In your management presentation, do not try to hide the concentration; instead, reframe it as a deep, institutional partnership. Show the buyer that this customer is operationally integrated into your workflows, making it incredibly expensive and disruptive for them to switch to a competitor. Back this up by showing your Accountability Chart and demonstrating that the customer relationship is owned by a capable account director, not by you as the owner. This proves the account will not walk when you exit. If the buyer remains anxious, suggest creative deal structures to bridge the risk gap. Suggest a structure where a portion of the purchase price is tied to the retention of this specific account over a twelve or twenty-four month period post-closing. Alternatively, you can agree to a seller note where payments are paused or reduced if that specific client terminates their contract without cause. By offering to share some of the risk through structured consideration, you preserve your target valuation multiple. You show the buyer you have complete confidence in the durability of your operations and the strength of your leadership team, turning a major red flag into a manageable transaction point.