Tip #91: Does the company have a customer concentration issue?

Tip 91-Customer Concentration

Does the company have a customer concentration issue?

In many types of businesses, “customer concentration” can be a real concern, with a few big customers that make up a substantial portion of the company’s revenues. Buyers, of course, are concerned that if any of those big customers leave after the sale closes, the buyer is not getting the company’s present value. If a company has too much customer concentration, business owners need to try to diversify their customer base or be willing to accept a flexible method of payment based on future revenues.