Curious to hear how investment professionals evaluate businesses with notable customer concentration. What factors do you consider, and how much can that impact valuation/pricing? How do you bridge the qualitative to the quantitative?
Many thanks in advance!
| +142 | What’s “the path” now? | 56 | 1d |
| +105 | Is Everyone Too Bearish on PE? | 34 | 2h |
| +48 | Why would anyone do PE in long term in 2026? | 13 | 1d |
| +37 | 3rd Year IB Analyst, Top Bucket, Still No PE Offer. What Would You Do? | 19 | 1d |
| +25 | Is This Normal in LLM PE | 10 | 4d |
| +24 | Q&A: What It’s Actually Like Working at an Independent (Fundless) Sponsor | 4 | 2d |
| +21 | Striking out in last rounds | 2 | 3d |
| +21 | UMM PE or High Paying Strat Finance? | 13 | 17h |
| +15 | DELETE | 1 | 1d |
| +15 | Overwhelmed by amount of data / granularity | 3 | 1d |
Career Resources
Get instant access to lessons taught by experienced private equity pros and bulge bracket investment bankers including financial statement modeling, DCF, M&A, LBO, Comps and Excel Modeling.
Run some scenarios of losing cette customer. Are they very profitable? Allocate probabilities and value the company in each scenario. That get‘s you your discount.
In practice, people will reflect it more intuitively
Thank you, this is very helpful
Interested
You can also structure around it. Example: you ascertain that the largest customer contributes 25% of total EBITDA. You say: we'll pay you 75% of the deal value at close (a full multiple on the 75% of EBITDA that you feel good about retaining) and we'll hold back 25% of the deal value for 1-2 years that will be contingent on retaining said customer.
Then you can run the math: if we keep this customer for the first year, we will have recouped X% of our total purchase price and if we lost the customer after a year, we would be in the deal for an [ ]x effective multiple, can I live with that, etc.?
Alias nam consequatur ratione atque reprehenderit. Illum qui similique minima sint.
Et itaque rem vel magnam nihil ullam nihil. Et voluptatem sit minus similique. Eveniet non rerum ut est nemo.
Et beatae odit facere. Rem repellendus aliquam tempore dolores alias magnam molestias. Voluptatem corporis dolorem et in tempore aliquam. Aliquid eligendi cupiditate consequatur aliquam omnis dolores.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...