How it works in a data room
The seller uploads revenue by customer, contract terms, renewal dates and churn history, often as a spreadsheet or data tape. Customer names may be coded at first to protect confidentiality, especially if a bidder competes with the target, and revealed later or only to a clean team. Buyers look at the share of revenue from the top one, five and ten customers, change of control clauses in their contracts and how pricing has moved.
Why it matters in a deal
A business earning 40 percent of revenue from one customer is riskier than one with a broad base, even if the totals are the same. High concentration often lowers the valuation multiple, drives requests for customer calls or introduces deal terms such as earn-outs. It is a standard part of commercial due diligence and the quality of earnings work.
Example
A software target shows strong growth, but analysis reveals that its largest customer accounts for 35 percent of revenue and has a contract up for renewal in four months with a termination right on change of control. The buyer asks for a meeting with the customer before signing and links part of the price to renewal. The due diligence guide covers commercial review.