Let's first understand customer concentration. Customer concentration is essentially where is revenue concentrated in your firm? Is it held by a few clients, a lot of clients? If you are in the bucket of having revenue very concentrated by a few good clients, or your acquiring a firm structured this way, this podcast episode is for you.

Why is customer concentration such a significant concern in M&A transactions?

What customer-related metrics are buyers looking for in an M&A transaction?

What red-flags will buyers be looking for concerning customer concentration?

What’s normal for large customers in the IT services world? How does this vary by category between MSPs, application developers, or software channel partners?

If you are a seller and have high levels of customer concentration, what should you expect in terms of purchase price adjustments?

Can you explain how earn-out provisions and contingent payments work with customer concentration?

What types of representations and warranties should will a buyer seek from the seller regarding customer relationships?

How can holdbacks or seller financing help mitigate risks?

What are the critical components of a successful customer transition plan post-acquisition?

How can representations and warranties insurance help in managing customer concentration risks?

Can you share any real-world examples where customer concentration was a significant issue in an M&A transaction and how it was successfully managed?

RELATED EPISODES:

Episode 152: Understanding Reps & Warranties for Buyers and Sellers. Listen now >>

Episode 90: Selling-In v Selling-Out. Listen now >>

Episode 73: Levers & Currency: M&A Deal Structures. Listen now >>

Listen to Shoot the Moon on Apple Podcasts or Spotify.

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