How much of my agency's revenue should come from one client?
Ideally, keep any single client below 12% of net revenue, but between 12 and 18% is perfectly acceptable AND quite normal. Above 18% is fragile, and buyers treat it as a standard due diligence red flag that triggers earnout structures and price adjustments. Watch the top three combined as well: below 40% is strong, above 50% is fragile. Three clients at 16% each is healthier than one at 30%.
Client concentration is the primary revenue risk metric in agency M&A. I describe it as kryptonite to a buyer, and I don't think that's an exaggeration.
Why buyers fear it
Here's how it plays out. A large client loves what you do. They keep giving you more and more. One day the CMO moves on, and the new one fires you. Half your team works on that account. The redundancy costs alone are impossible to meet. Your business might actually die. This is not apocryphal. I've seen it happen.
Concentration turns a routine commercial event, a client changing leadership, into an existential one. Buyers know this, so they discount income that depends on a small number of relationships.
The benchmarks
Single client as a share of net revenue. Below 12% is strong. Between 12 and 18% is acceptable. Above 18% is fragile, and it's the point where earnout structures and price adjustments start appearing in offers.
Top three clients combined. Below 40% is strong. Between 45 and 50% is acceptable. Above 50% is fragile. And the shape of concentration matters as much as the total: three clients at 16% each is a healthier business than one client at 30%, even though the totals are similar.
If you already have a whale
Nobody sensible turns down growth from a great client, and I'm not suggesting you should. The discipline is in what you do with the money. It's tempting to send it all to the bottom line. Don't. Devote a very healthy proportion of the added revenue to finding and onboarding other clients, so the whale shrinks as a percentage even while it grows in absolute terms.
Concentration you are actively diluting reads very differently to a buyer from concentration you have learned to live with. One says you understand risk. The other says you got lucky and stopped thinking.