This business model embeds a vendor so deeply that a client's own institutional knowledge atrophies. The client's employees no longer understand critical business processes, making it prohibitively expensive and risky to switch vendors, who now hold all the expertise.

Ferrellgas locks in its residential customer base by leasing propane tanks to 70% of them. This strategy creates significant switching costs, as a customer would have to pay Ferrellgas to remove the old tank and another company to install a new one, resulting in a sticky and predictable revenue stream.

An agency's stability is determined by how difficult it is for clients to leave. High-stakes services like accounting create sticky relationships and are great businesses. Volatile, project-based creative work suffers from a feast-or-famine cycle because clients can switch providers with little friction.

Supplier sales representatives frequently change roles, creating inconsistency for the customer. The trusted advisor provides a stable, long-term relationship, acting as the constant strategic guide regardless of who represents the vendor. This is a core, often overlooked, value proposition.

Deal-making is evolving beyond same-sector acquisitions. A key trend is "intersector" consolidation, where asset managers acquire wealth or insurance firms. This strategic move aims to control a larger portion of the value chain, bringing the asset manager closer to the end client.

While AI and fintech lower switching costs for retail customers, small and mid-cap banks retain their core clients—small to medium-sized businesses. These businesses depend on the sticky, lifeblood credit relationships with their local banks, making them less likely to switch for better deposit rates.

The intense lobbying for 'baby brokerage' accounts reveals a core financial services strategy: acquire customers young. Firms know that early brand loyalty, combined with the intentional difficulty of transferring accounts (the 'Hotel California' strategy), makes a customer's first financial account highly likely to be their account for life.

The most defensible businesses, especially in enterprise software, create such high switching costs that customers are essentially locked in. This "hostage" dynamic, where leaving is prohibitively difficult, is a stronger moat than simply having satisfied customers who could still churn. It's the foundation of an enduring software business.

Post-exit financial planning is too late. Jacqueline Johnson learned from her banker that founders should be interviewing and establishing relationships with firms like Goldman Sachs or UBS *during* the sale process to create a full strategy for taxes and investments beforehand.