
Customer Concentration Risk: Lessons from a Failed Acquisition
When buying a small business, financial red flags aren’t always obvious. Though commonly overlooked, customer concentration risk is one of the most dangerous red flags. We recently worked on a deal where the seller claimed their largest customer only accounted for 20% of revenue. But after a deeper dive in the quality of earnings (QoE) process, we uncovered that the real figure was over 60%. That discovery ultimately killed the deal.




