EPISODE 226. This episode begins with the vocal stylings of Ashley Battel from the Revenue Rocket Outreach team.
EPISODE NOTES:
• Customer concentration in IT‑services M&A is it a hero or risk?
• Concentrations of 20–50%+ revenue across 1–5 anchor clients are common.
• Evaluate revenue/profit trajectory, contract history, and relationship depth to size risk.
• Strategic buyers often welcome concentration for cross‑sell upside; financial buyers discount or structure.
• Deal mechanisms (earn‑outs, hold‑backs, gain‑share “circuit breakers”) protect all parties if the key client churns.
• Valuation impact: risk is typically offset with structure rather than outright price cuts.
• Pre‑sale de‑risking: broaden touchpoints, add contract vehicles, and build succession around the anchor client.
• Diversification upside: the right acquirer may reduce their own concentration and grow wallet share.
• Bottom line: understand the full picture, concentration can fuel growth instead of derailing deals.
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Listen to Shoot the Moon on Apple Podcasts or Spotify.
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