Customer Concentration
Customer concentration is a risk factor that caps your valuation multiple regardless of other strengths. If your largest customer is 30%+ of revenue, a buyer asks: "What if that customer leaves after the acquisition?" The answer to that question directly reduces what they'll pay. Diversified businesses (no customer over 10%) get premium multiples. Concentrated businesses (one customer over 50%) face severe discounts or may struggle to sell at all.
Example
An agency with 5 equal clients at 20% each is moderate concentration. The same revenue from one client at 50% and many small clients gets a 0.5x–1.0x multiple reduction.
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