Three years ago, we watched a $4.2M EBITDA manufacturing business collapse to $1.1M in eleven months. Not because of operations. Not because of the market. Because one customer — representing 61% of revenue — quietly shifted their supply chain overseas. The seller knew. The broker knew. The LOI had already been signed. This isn't a cautionary tale about disclosure. It's about something subtler: how acquirers systematically underweight revenue fragility during diligence because the financials look clean on the surface. Here's what we learned from that deal — and dozens like it since: **Customer concentration risk isn't just about percentages. It's about switching costs.** A business where one customer represents 55% of revenue can still be a fortress acquisition — if that customer has contractual lock-in, deep integration dependencies, or a 12-year renewal history. Conversely, a business with 200 customers can be dangerously fragile if the top 8 are all referrals from a single relationship the seller owns personally. The number alone tells you almost nothing. The stickiness of that revenue tells you everything. So when we rebuilt our diligence framework, we stopped flagging concentration by threshold (the old 'anything over 20% is a red flag' rule) and started mapping what we now call the Customer Dependency Matrix: — Is the revenue contractual or discretionary? — Who owns the relationship — the business or the founder? — What's the customer's switching cost in time and dollars? — Has the concentration been shrinking, stable, or growing over 36 months? — What happens to that customer if the founder exits? That last question is the one that closes deals or kills them. In 2025, our data across 340+ small business transactions showed that 67% of post-close earnings misses in SMB acquisitions were directly tied to customer concentration — but only 18% of those deals had flagged it as a primary risk in the original deal memo. The diligence caught the concentration. It missed the fragility. If you're in PE, business brokerage, or advising on SMB acquisitions, the framework shift is this: stop asking 'how concentrated is this customer base?' and start asking 'how replaceable is this revenue without the seller in the room?' That's the question that saved us from three bad deals last year alone. AcquiAxis AI surfaces these dependency signals automatically during diligence — so your team spends less time building spreadsheets and more time asking the questions that actually protect your multiple. Curious how you're currently assessing customer stickiness in your deals? Drop your approach in the comments — I'd genuinely like to compare notes.redacted