I've come across a deal that looks great in all other ways (healthy EBITDA margin, growing industry, fair multiple, low capital intensity, etc.), however one major red flag is that 3 customers make up 95% of the company's revenue.

The seller has assured me that the reason for this is that these customers fill their capacity and that they have requests from other customers they can't serve but stick with these 3 customers out of loyalty as they have been with the business for many years. He also mentioned that these customers have close relationships with the managers who will stay on for at least two more years.

Has anyone successfully bought a business with such high customer concentration or would this be too risky? Any thoughts on how to mitigate or further due diligence the risk?