Hi searchers - would love some ideas on how you would go about structuring a deal to address customer concentration risk.

Working on an LOI for a B2B service provider that has some significant concentration--they have a 25% client, 15% client, and 10% client, all longstanding clients of the company. They are a small company, enterprise value of ~600k. So this is a pretty small deal, but in an interesting and niche space with a good reputation. They are very resistant to the idea of giving me access to the clients post LOI and due to their small size don't feel that strategies like engaging a 3rd party survey type firm to talk to their clients will be inconspicuous.

How would you go about due diligence in this situation? And/or how can I structure the deal in consideration of the concentration risk.

I do plan to ask for a 20% non-recourse subordinated seller note. I'll use some SBA funds so earnout is not an option. I don't think they'd agree to a forgivable seller note based on retention of those clients, my understanding is that's pretty tough to get a seller to agree to in this market and they aren't desperate to sell.

Based on our relationship so far, I don't really think they are deliberately hiding anything about these clients or misleading or I'd walk away regardless, but they are protective of the clients and privacy of the deal. Obviously, you never know though.