Glossary
Customer concentration
Customer concentration measures how dependent a business is on its largest customers. A common warning sign is any single customer providing more than about 10 to 15% of revenue, or the top five providing a large majority.
High concentration means losing one relationship could change the business overnight, especially if that customer was loyal to the previous owner personally.
How buyers respond: a lower price, a seller note or earnout tied to key customers staying, meeting major customers before closing, or walking away.