Five Diligence Red Flags Buyers Miss

Customer concentration above 25% of revenue can collapse value overnight. Ask for trailing twelve-month concentration by account, not just “top customers.”

Owner-dependent sales processes rarely survive transition. Map who owns relationships and what happens if they leave.

Normalized cash flow that relies on one-time add-backs needs receipts. If an add-back cannot be documented, discount it.

Stale inventory and deferred maintenance show up late. Walk the floor and compare CapEx history to industry norms.

Finally, watch for revenue recognition that pulls future work into the current period. Quality of earnings is still king.