I am currently in LOI with a business. During due diligence research, I discovered a seller/customer family relationship. In short, the seller has a sibling who is a senior executive team member at one of their customers. This was not disclosed in the deal data room. I am seeking additional details (revenue through that customer by year, gross margins for those sales, etc). But a few questions for the community:

At what % of revenue does it become a red flag?

What else would you ask?

What would you do to mitigate risk? (Change offer to increase seller note with standby terms, equity position for more skin in the game, etc?)

Lastly, has anyone experienced this and have any good or bad experiences?

Thank you.