What's a good framework for customer concentration in project based businesses?

searcher profile

October 24, 2025

by a searcher

I'm primarily looking at manufacturing / B2B service companies. Some potential targets manufacture products that are ultimately used in construction projects (think panels, pipes etc) with their primary customers being large contractors or subcontractors. I've seen some of these have fairly extreme customer concentration with top representing 60%+ and in some cases top 1 being as high as 40%+. I want to avoid extreme concentration but is this just the nature of these businesses?
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Reply by a lender
from University of Missouri in Denver, CO, USA
I would tie the concentration to an earn out
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