Client concentration risk mitigation techniques

by a searcher from University of Pennsylvania - The Wharton School

5 years ago

I've come across a fair few companies that have great numbers but one very large client (20%+ of sales). Aside from operational risk mitigation tactics (e.g. get more clients!), I wonder whether there are any risk mitigation techniques or tactics that are used at the time of acquisition (e.g. clauses or conditions in the docs, earn-outs tied to this issue, etc.)?

20 likes
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19 comments

searcher

Oh and obviously just due diligence the heck out of those major customers

4 months ago | like reply | 0 likes

searcher

You need to due diligence the heck out of the major customers, but other than limiting your downside risk via lower purchase price with earnouts, there's not a whole lot you can get done in my experience.

4 months ago | like reply | 0 likes

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