Customer Concentration Clause
Customer concentration disclosures and the indemnification language that protects buyers when a top customer leaves.
- Customer concentration disclosure (top 10)
- Renewal status of top customer contracts
- Material adverse change definition (does customer loss trigger MAC)
- Indemnification trigger language for customer departure
If this clause already feels aggressive in isolation, upload the full contract and see how it combines with payment terms, liabilities, and exit rights.
Analyze My ContractWhat this clause actually does
Customer concentration is the percentage of revenue from the top customers. SBA lenders care: any customer over 20% triggers extra scrutiny, and 50% or more can disqualify the loan. The clause covers what happens if a concentrated customer leaves before, during, or after close.
Why people get burned by this clause
A target with 60% revenue from one customer is not the same business after that customer churns. Indemnity language for customer departure can be the difference between recovering purchase price and eating the loss.
What should make you slow down
- No specific indemnification trigger for top customer departure
- Seller has not disclosed contract renewal status of top customers
- Customer concentration disclosed only at the top 5 level (not top 10)
- Reps about customer satisfaction are vague or aspirational
- No interview rights with top customers during diligence
Where you usually see it
- Asset purchase agreements
- Disclosure schedules
- SBA loan packages
What the platform checks in the live contract
- Customer concentration disclosure (top 10)
- Renewal status of top customer contracts
- Material adverse change definition (does customer loss trigger MAC)
- Indemnification trigger language for customer departure
- Interview rights during diligence period
What stronger language usually looks like
- Customer interview rights pre-close
- Specific indemnification trigger if top customer terminates within 12 months post-close
- Material adverse change definition includes top customer loss
- Top 10 customer concentration disclosed with renewal dates
Definitions worth opening next
Articles that go deeper
Customer concentration is one of the top 3 reasons SBA-backed acquisitions blow up post-close. Get interview rights and write specific indemnification triggers.
See how this clause behaves in the real contract.
The clause library gives you judgment. The full review shows how this clause combines with the rest of the agreement, then quotes the exact language, scores the risk, and explains what to push on next.