Evidence-based interventions not originally developed for underserved populations often need to be adapted to reflect the culture of the people you intend to serve. With proper presentation and by potentially structuring a deal that will mitigate some of this transactional risk, the better the probability of a sale and maintaining a fair purchase price.Home » About Us » Blogs » How to Make Effective Cultural Adaptations to Evidence-based Interventions How to Make Effective Cultural Adaptations to Evidence-based Interventionsīy Rubén Parra-Cardona, PhD, Associate Professor, Steve Hicks School of Social Work, UT Austin for the 2018 Clinician’s Corner Retention of major customers through a transition period will be a predominant concern for any buyer. ConclusionĬustomer concentration is a serious issue. Contractual revenues can significantly soothe a buyer’s fear of losing those customers when the business is transferred. Another strategy for the owner of a company with customer concentration issues might be to solicit their major accounts to enter into long-term contracts prior to putting the business on the market. Of course, these deal structures place some of the risk back on the seller, which is not ideal for the seller since operational control is in the buyer’s hands. Another possibility may include earnout payments based on company performance for a specified term. For example, a certain portion of the purchase price may be held in escrow for a defined period of time in the event one or more customers are lost post-closing. What can be done to reduce this percentage of concentration?Ī buyer's concern in this area may result in a lower sale price or a deal structure that would bridge the risk gap.Is there a relationship with the current owner and the customer such that the continuity of the customer under new ownership may be uncertain?.How painless is it for the customer to switch to a competitor and what could cause that to happen?.Does the customer enjoy preferential pricing that would be hard to find elsewhere? Is it a high-volume, low-margin customer? If so, the profitability of this customer's loss may not seriously impact the company's bottom line.Does the customer have more than one location serviced by the company or purchase multiple products? If so, this signifies that there is a co-dependency and solid relationship with this customer.Is longevity of the relationship of significance with the customer?.Is there an exclusivity relationship with the customer?.Is there a customer contract in place? Is it transferable?.What would be the impact from the loss of a major customer?.Many small businesses have customer concentration issues, which must be addressed in order to sell the business. Just as a business enjoys value drivers, it may also suffer from value detractors-one of which is customer concentration. Pay attention to your accounts receivable and aging report because this will indicate if your customers are facing cash flow issues.Ĭustomer Concentration: "Too Many Eggs in One Basket" Scenario.What geographical area do you serve? Are your customers mostly local, regional or international?.It has potential to generate future earnings for a new owner and may add significant value. Customer databases contain valuable information that a potential buyer can use as a source of competitive advantage.A quick insight into the diversity of your customer base is to run a 'gross revenue by customer report by year.' It will show you the percentage of total revenue each customer generates year-by-year.Here are a few things to understand about your customer base and of interest to potential buyers: Customer diversity measures how insulated from any large-scale domino effect your business is to any reduction in demand or economic problems your customers may face. An enterprise serving a multiplicity of customer types, or customers in unrelated industries, that are not affected by the same economic conditions further mitigates risk. Potential buyers look for a broad customer base in which no single client accounts for more than 10 percent of total sales.
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