I have a health care staffing client right now that is attracting a
The fact is that customer concentration can be a very serious issue. I know of a large deal that had three very interested parties that went so far as to meet management and propose a deal. The problem is that lenders refused to loan on the deal because of customer concentration issues, and without financing all the buyers eventually went away. The company is off the market while it tries to diversify its customer base.
On the SBA loan application is a yes or no question, “Does any customer make up more than 10% of accounts receivable?” I know from experience that if you tick the “yes” box, many more questions follow and you may or may not get an SBA loan at that point.
In the case of my health care client he knows it would take a few years of additional hard work to pick up new customers, and he would rather sell now and take on the risk of future performance payments. If you see this kind of customer concentration issue in your business, you might want to create and execute a plan on how to change it before you sell.