Account Concentration
Also known as: Customer Concentration
Account concentration measures the share of revenue tied to the agency's largest accounts — high concentration creates outsized risk if a single client churns post-close.
What is account concentration?
A diversified book of 500 small accounts behaves very differently from a concentrated book where 5 accounts produce 40% of revenue. Buyers care a lot about which one they're buying.
The industry rules of thumb: any single account over 5% of revenue is worth flagging. A top-3 concentration over 20% is a yellow flag. A top-10 over 40% is a red flag. Concentration penalties get applied to the multiple and embedded in the deal structure (escrow holdbacks tied to retention of the top accounts, longer earnouts, named-account non-competes).
Why it matters in agency valuation
Concentrated books are more valuable per-account but more fragile per-dollar. A buyer paying 7x EBITDA on a book where one account is 25% of revenue is implicitly betting that account will retain. If it churns 18 months post-close, the buyer's IRR craters. They underwrite this risk explicitly.
Example
How MyAgencyValue uses this
Tier 2 does not capture account-level concentration (it would require a list of named accounts). Tier 3 collects concentration data and adjusts the quality band explicitly.
Related terms
Key person risk is the degree to which an agency's revenue, retention, or carrier relationships depend on a single individual — typically the principal, top producer, or sole servicing AM.
Book roll is the process by which an acquired book of business transfers from the seller's agency to the buyer's agency post-close, and book-roll probability estimates how much of the book actually retains through that transition.
An earnout is a portion of the purchase price paid to the seller after closing, contingent on the business hitting specified retention, revenue, or EBITDA targets — typically 10–30% of the total price across 1–3 years.
A quality band is the up-or-down adjustment applied to a base multiple based on book quality factors — typically capped at ±1.5x of EBITDA multiple, distributed across 7–8 individual factors.
Last reviewed: April 24, 2026
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