We have a highly profitable business, but our top three customers account for over sixty percent of our total revenue. How do we de-risk this concentration during our exit runway so a buyer does not heavily discount us?

Question

Tyler Smith · Accepted Answer

Customer concentration is a major red flag for sophisticated buyers because the sudden loss of one client could cripple the business post-close. To mitigate this risk on your runway, you must prove that these accounts are institutionalized rather than tied to your personal relationships. First, restructure your Accountability Chart to transition these client relationships from yourself to dedicated account managers. Introduce these managers to your key clients gradually, ensuring they are the primary point of contact for all service delivery and strategy. Next, secure long-term, multi-year contracts with these top clients that include change-of-control clauses, ensuring the agreements remain valid after the sale. If you cannot secure long-term contracts, focus your remaining runway on diversifying your revenue. Use your marketing and sales Rocks to aggressively acquire smaller, highly diversified accounts to dilute the percentage of revenue held by your top three clients. By showing a clear downward trend in concentration risk and proving that your accounts are managed by a self-sufficient team, you reassure buyers that your revenue stream is stable and highly transferrable.