Customer Concentration Discount
The amount buyers knock off your price because they're worried about losing a key customer after the sale.
The customer concentration discount is the dollar (or multiple) reduction buyers apply to your purchase price when one or a few customers represent a large share of revenue. It's not a fixed formula — it's a judgment call buyers make based on how exposed the business is. Rough rules of thumb: if your top customer is over 25% of revenue, expect a meaningful discount. Over 40%, the discount becomes severe and some buyers walk away entirely. Over 60%, the business is largely uninvestable for institutional buyers — you're typically selling to the customer themselves or to someone who's specifically structured to absorb the concentration risk.
The discount shows up two ways — a lower multiple, or a deal structure that pushes part of the price into earnout tied to the concentrated customer staying.
The discount isn't punitive — it's the buyer pricing in the probability that the concentrated customer leaves after closing.
Find out what a buyer would see in your business — before you talk to one.
The Exit Desk free assessment takes 2 minutes. If you'd rather see what a full report looks like first, read a sample.
