Concentration Risk

Most businesses know their biggest customer.

Few know what happens to the valuation, the pipeline, or the board conversation when that customer leaves.

A SaaS company with one enterprise account generating 35% of ARR thinks they have a great customer. They have a single point of failure with a 90-day termination clause. A services firm where the top three clients cover payroll thinks they are doing well. They are three phone calls from insolvency. A manufacturer whose largest buyer also supplies 40% of referrals thinks they have a relationship. They have a dependency.

PE firms discount valuations 15-35% when concentration exceeds 30%. Some walk away entirely above 20%. The maths is not subjective. This tool applies the same frameworks they use.

20 questions. 6 dimensions. One honest read on where concentration sits and what it costs you.

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