May 23, 2019
The following is an excerpt from a recent article posted on Exit Promise, which offers small business owners resources to start, grow, and ultimately sell a valuable business. The article contains an interview with Matt Gilbert conducted by Holly Magister, the Founder of Exit Promise.
One of the greatest risks any buyer faces is what will happen to the business’ best customers post-sale. Will the top customers celebrate the founder’s great accomplishment or maybe decide it’s a good opportunity to negotiate better pricing or payment terms with the new owner? Or worse yet, will they be spooked by the new owners and find an alternative vendor?
Astute buyers measure this risk quickly. Typically, one of the first questions experienced buyers ask the business broker is about the presence or lack of a customer concentration.
For the business owner considering the sale of his business in the near future, having a clear understanding if a customer concentration is present in their business or not is vitally important. In fact, the lack of a customer concentration is a great selling point.
When a customer concentration does exist, how is this valid objection overcome by the seller? How does the business broker get such deals done? And how would a bank or the SBA Lender deal with such a situation?
Today, I sat down with one of our Featured Advisors to discuss this matter. Matt Gilbert...weighs in with his thoughts on this subject.