Commandment 5 - Diversify Risk

The 10 Commandments of Selling Your Business: Commandment 5 - Diversify or Die — Reduce Concentration Risk

When it comes to maximizing your company’s value, concentration risk is a silent killer. Whether it’s relying too heavily on one major customer, supplier, or market, dependency introduces fragility — and buyers notice immediately.

The Insight

Smart buyers and investors look for stability, predictability, and scalability. When they see that a single client, vendor, or channel represents too large a percentage of revenue or costs, they see exposure — not opportunity.

The Problem

In M&A, it’s simple math: dependency = risk, and risk = a lower multiple. Heavy concentration limits negotiating leverage and gives buyers reason to discount your value or structure deals with earn-outs and contingencies.

The Truth

A diversified customer and supplier base signals strength. It shows your business can withstand shifts in demand, pricing, or supply without missing a beat. That’s the kind of operational resilience and scalability that drives premium valuations.

Spread the risk — and you’ll grow the value.

At Exit Advisors Group, we help business owners identify and eliminate concentration risk, building the kind of balance and diversification that investors reward.

Request a value-risk assessment today.

Learn how diversification can turn hidden risks into measurable enterprise value.