Customer Concentration

by a searcher from University of Oxford

1 year ago

Any tips or advice for dealing with customer concentration? 

When considering an opportunity with customer concentration, what are the best risk mitigation strategies for addressing customer concentration?

2 likes
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17 comments

professional from University of Minnesota - Twin Cities Campus

It can be a tough sell, but see if you can actually speak with these key customers as part of the due diligence process. Sellers might not like it (their brokers and lawyers will almost certainly hate the idea) but I've seen it be helpful in overcoming concerns around the concentration issue, in addition to mechanical levers to de-risk the deal (forgivable notes, earn-outs, etc.)

9 months ago | like reply | 0 likes

searcher from Northern Alberta Institute of Technology

Try to risk-rate the valuation to what the company would be worth if they lost that one customer, coupled with an estimated risk of actually losing the customer.

1 year ago | like reply | 0 likes

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