Our largest customer accounts for twenty-five percent of our total revenue, and the buyer is using this concentration to demand a massive discount on our entire valuation. How do we structure the deal to isolate this customer risk without lowering our overall enterprise value multiple?

Question

Tyler Smith · Accepted Answer

When one customer represents twenty-five percent of your revenue, a buyer will use that concentration risk to chip away at your valuation multiple. To preserve your enterprise value, you must isolate this risk in the deal structure rather than accepting a blanket discount on your entire business. One highly effective strategy is to split the transaction into a dual-pricing model. You value the diversified seventy-five percent of your business at a premium, market-clearing multiple. For the concentrated twenty-five percent, you structure a specific, contingent earnout or a separate class of seller note that is directly tied to the retention of that specific customer. If the account stays, you get paid in full. If the account leaves, the buyer is protected. This structure keeps the buyer at the negotiating table because it directly addresses their risk without punishing the value of your core, healthy operations. To support this negotiation, use your EOS V/TO® to show the buyer your documented strategy for expanding other accounts. Demonstrate through your Accountability Chart that dedicated account managers run this major account, proving the relationship does not depend on the departing founder. By combining a targeted deal structure with operational proof of transferability, you protect your overall valuation multiple and keep the transaction moving forward.