Series 79 practice questioneasyOperational due diligence – customer concentration
Operational due diligence reveals that 60% of a target company’s revenue comes from one customer. This MOST likely raises concerns about:
- ARevenue concentration risk✓ Correct answer
- BCompliance with IRS Section 338(h)(10)
- CTax loss carryforwards
- DAntitrust risk
Explanation
Why A — Revenue concentration risk
A high percentage of revenue from a single customer creates concentration risk, making the business vulnerable if that customer departs. Tax compliance and antitrust concerns are not directly related to customer concentration.
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