Assess whether a top customer is actually sticky (b2fbd2)

Situation

IP diligence counsel's financial counterpart in a family-office reviewing a manufacturing target has one working extract — customer concentration and termination-for-convenience clauses — after a founder who will not sign a non-compete. If customer concentration and termination-for-convenience clauses cannot support a top customer is actually sticky, the honest M&A Due Diligence output is hold.

Decision

IP diligence counsel's financial counterpart in a family-office reviewing a manufacturing target must choose Proceed / Reprice / Walk / Hold using customer concentration and termination-for-convenience clauses after a founder who will not sign a non-compete.

Hypotheses to test

• A founder who will not sign a non-compete is noise around an already-controlled Separation and Integration process in a family-office reviewing a manufacturing target, given customer concentration and termination-for-convenience clauses.
• A founder who will not sign a non-compete is the event in customer concentration and termination-for-convenience clauses that forces Proceed for IP diligence counsel's financial counterpart under M&A Due Diligence.
• Customer concentration and termination-for-convenience clauses shows a one-file miss after a founder who will not sign a non-compete, not a Separation and Integration program failure.
• Customer concentration and termination-for-convenience clauses cannot decide a top customer is actually sticky yet after a founder who will not sign a non-compete; hold is the only M&A Due Diligence close a family-office reviewing a manufacturing target can defend.

Analysis required

• Test whether a founder who will not sign a non-compete is a diligence gap, a price chip, or a walk-away.
• Separate a one-off add-back from a recurring earnings issue in customer concentration and termination-for-convenience clauses.
• Map reps, earnout mechanics, and integration risk a family-office reviewing a manufacturing target would inherit.
• For this M&A Due Diligence Separation and Integration file, read customer concentration and termination-for-convenience clauses against a founder who will not sign a non-compete and write the one fact that would move a top customer is actually sticky for IP diligence counsel's financial counterpart.

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