Customer concentration is one of the first things a buyer should measure in a digital business, and one of the easiest to misread. A business with healthy margins and steady growth can still carry most of its risk in a handful of relationships. The question is not whether concentration exists. It is whether the revenue attached to it will survive a change of ownership.

Measure it three ways

Start with the share of revenue from the top customer, the top five and the top ten over the last twelve months. Then repeat the exercise for channels and platforms. A SaaS business may have no single large customer but still depend on one marketplace listing for most new sign-ups. A content business may have hundreds of advertisers but one ad network paying most of them.

Then look at gross profit rather than revenue. A large customer on discounted terms can matter less to earnings than its revenue share suggests, and a small customer on a premium contract can matter more.

Read the contracts, not just the numbers

For each concentrated relationship, check:

• the remaining term and renewal mechanics

• termination for convenience and notice periods

• change-of-control or assignment clauses

• pricing commitments, caps and service credits

• who manages the relationship day to day

A three-year contract with a change-of-control termination right is, for a buyer, much closer to a month-to-month arrangement.

Separate the relationship from the founder

In founder-led businesses, large customers are often personal relationships. Ask who the customer's main contact is, how often the founder is involved, and whether anyone else in the business has met them. If the honest answer is "only the founder", the transition plan matters as much as the contract.

Test the history

Concentration that has been stable for several years is different from concentration created by one recent win. Ask for revenue by customer over at least two to three years, and look for customers that have already reduced spend, renegotiated or run a competitive tender.

Reflect it in price and structure

Concentration does not have to stop a deal. It changes how the deal is built. Common options include:

• deferred consideration or an earnout linked to retention of named customers

• a holdback against specific warranties

• completion conditions, such as a customer consent or renewal

• a longer founder transition period with clear responsibilities

The aim is to place the risk with the party best able to manage it, rather than to discount the price by a number nobody can explain.

A working threshold

There is no universal limit. As a working rule, any customer, channel or platform above roughly a fifth of revenue or gross profit deserves its own section in the diligence plan, with named evidence and a clear owner.

Further reading from Acquiry: platform concentration risk and the quality of revenue framework.