SkyCrest Advisors on Exit Risk: How Customer and Employee Loss Can Destroy Business Value, Reel

Mahen Gundecha of SkyCrest Advisors joined Doug Green, Publisher of Technology Reseller News, for a short but impactful podcast reel highlighting a critical issue in MSP exit planning: how quickly business value can erode if key relationships are not secure.

Using a real-world scenario, Gundecha explained that service businesses—particularly MSPs—carry inherent risk due to their dependence on customer concentration and key employees. Even with contracts in place, clients can exit, creating immediate financial impact.

He illustrated this with a simple example: if a single customer represents 20% of revenue, losing that client can significantly reduce profitability—and when valuation multiples are applied, that loss can translate into millions of dollars in reduced company value.

“When you’re selling a service company, you’re buying people, capabilities, and customers,” Gundecha said. “If key customers or employees leave, the value of your business drops—sometimes dramatically.”

The risks extend beyond customers. Gundecha shared cases where key employees departed during the sale process, sometimes triggered by the announcement of a pending acquisition. Since buyers are ultimately acquiring the team and its capabilities, the loss of critical personnel can jeopardize or even derail a deal.

He also noted that undisclosed risks—such as clients planning to leave—can surface late in due diligence, forcing difficult conversations with buyers. In some cases, deals can be restructured or salvaged, but in others, buyers may walk away entirely due to heightened risk.

The key takeaway: MSP owners preparing for an exit must proactively strengthen and validate relationships with both customers and employees well before entering the sale process. Regular engagement, transparency, and retention strategies are essential to preserving value.

Gundecha emphasized that valuation is not just about revenue multiples, but about the stability and durability of the business—factors that directly influence buyer confidence and final deal outcomes.

Learn more: https://www.skycrestadvisors.com/