Bizma Monthly Mailbox: October 2025

This is the first in a monthly Q&A series, where I answer your questions about selling your business.

Let's get into it.

1. Revenue Concentration

You're right to flag this as a concern Andy. Revenue concentration is one of the key things buyers look for in their financial due diligence (often called Quality of Earnings).

There's clear risk to a buyer here – they are just two client calls away from your business losing 60% of its revenue. And they will bake that risk into their valuation modelling, reducing the price they can offer.

There's no firm target (it's very case-specific), but buyers would usually want less than around 30% of revenue to come from the top handful of clients. So you are definitely at risk of a reduced price here.

The good news is that you have 12 months to fix it.

Here's are three actions to fix it so that it doesn't squash your valuation:

Firstly, try to get that percentage down by bringing in new high value clients. Sorry, that's obvious – I am sure you are already trying this, and I know it isn't easy.

Secondly, try to lock those high value customers into longer-term deals. If you can show to the buyer that they are committed to 2-3 year deals, that will really help. Consider being generous with discounts, even if those reduce your EBITDA, that could be more than offset by an increased multiple on exit.

Thirdly, start preparing an evidence pack to convince the buyer that these customers are at low risk of churning. That might include historical churn figures and retention rates. You then need to work really hard over the next 12 months to keep retention rates high.

Together, these should help mitigate the risk of an underwhelming valuation.

When you start your sale process, be upfront in discussions with buyers. This issue will come out as soon as they start their DD, so there's little value in hiding it.

Some buyers will see this as a red flag and may walk away, but others will be less concerned (especially if this is common in your industry and they have done many deals in your space). Those are the buyers that you want to find.

2. Business expenses

This is a tricky one...

You certainly want the buyer to value the business without the drag of these non-business expenses. That increase in EBITDA will flow directly through to a higher valuation.

Take your existing P&L from the last five years, and identify the personal expenses that could be carved out. Use this to create a set of 'adjusted' P&Ls for the last 5 years to share with the buyer. These will show the true (higher) EBITDA.

You will then need to negotiate that these adjusted accounts are the appropriate numbers to use as the basis of valuation.

But you need to flag this sensitively with buyers, without scaring them that you've broken accounting rules so heavily that it will attract legal risk.

If the buyer feels that you've pushed the boundaries here, they might ask for some warranty or indemnity protection in case the company gets sued for including these expenses in the accounts. If so, get your lawyer to minimise the scope of the clauses and consider getting some W&I insurance.

3. Sponsor leaves

The 'sponsor' is key person at the buyer who advocates for and drives the acquisition forward. This person champions the transaction internally, gathers support, secures internal approvals and generally pushes things through.

They are key to getting the deal done.

There's definitely a risk that the deal will wither and die without their energy and driving force.

If he has shared that he might be leaving, it sounds like you have a close and trusting relationship. So share your concerns with him, and ask for his support and coaching to build more relationships from across the buyer's organisation.

He can connect you with other people who are key stakeholders in getting the deal over the line. Start the process of building relationships and trust ASAP.

If he does end up leaving, you have a cushion of other sponsors (albeit less long-standing) to fall back on.

Want to submit a question for next month? Reach us as bizmahq@gmail.com.