Add-on acquisition criteria: should records depth be on the screen?

Add-on acquisition criteria usually cover strategic fit, size, margin, customer mix, integration risk and price. Records depth belongs on the screen only as a secondary note: never a reason to buy, but a flag telling the platform which archives and exports to preserve at close, in case licensing is considered later.

What are the standard add-on acquisition criteria?

Most buy-and-build screens test the same six things: strategic fit, size, profitability, customer quality, integration risk and price. Records depth is not on that list, and it should not drive a purchase decision. It earns one line on the screen for a different reason: it tells the platform what to keep.

An add-on that passes the standard screen arrives with its own email, shared drives, CRM, finance and support history. Whether that history survives the first twelve months of integration is decided early, usually by whoever runs the systems cutover. A short note at the screening stage makes that decision deliberate.

The core criteria, and where records fit

Criterion	Typical question for the deal team	Records-depth note
Strategic fit	Does it add a geography, a service line or a customer segment the platform lacks?	None. Fit decides the deal.
Size	Revenue, EBITDA and headcount within the platform's integration capacity?	Headcount is the one overlap: a business with 50+ full-time employees at peak (contractors excluded) is the size baseline for a licensing conversation later.
Profitability	Margins and quality of earnings consistent with the platform?	None.
Customer quality	Concentration, contract terms, churn?	Note whether client contracts restrict reuse of work product or correspondence.
Integration risk	Systems, people, culture, key-person dependence?	Note which systems will be retired and when.
Price	Multiple and structure relative to the platform's own?	None. Never pay for records.

Treat the right-hand column as a log, not a score. No number in it should move the bid.

Why records depth is a secondary note, not a criterion

A data license is a one-time payment for rights the company already holds. It cannot be counted on at the time of bid, because qualification, inventory, rights review, price and buyer interest all come afterwards, and nothing is binding until the company signs.

Pricing records into an offer would also mix two different decisions. The first is whether the business is worth buying. The second is whether, once it is part of the platform, the combined company wants to license anything at all. The second decision belongs to the platform after close, and it is easier to make if the archives still exist.

So the rule is simple: records depth never raises the price, but it can change the integration plan.

The three-line records note for the screening memo

Add these three lines to the add-on summary, kept to a few sentences each:

Systems and age: which core systems the target runs (email, chat, CRM, finance, support, engineering, operations) and roughly how many years each holds.
Retirement plan: which of those systems the platform intends to migrate or shut down, and the target date.
Ownership: who at the target can run a full export today, and whether any records belong to the target's clients rather than the target.

The network opportunity finder is a handy way to think through which companies around the platform fit this pattern.

What to preserve at close: a short timeline

When	Action	Owner
Diligence	Ask which systems exist and who administers them	Deal team, with the target's IT lead
Signing to close	Add a covenant or side letter not to delete archives or cancel tools	Counsel
Day 1	Name an owner for exports and confirm admin credentials transfer	Platform COO or CIO
Days 1-100	Take a complete export of any system scheduled for retirement before it is shut down	Platform IT
After integration	Decide whether combined records are worth a licensing conversation	Platform CEO, with the sponsor

The cost of keeping an export is small. The cost of discovering later that the only copy went away with a canceled subscription is permanent.

Add-on checklist: should the records note flag a follow-up?

The target has operated for several years with documented, system-based records.
It runs many systems, often 10-15 or more at stronger companies, rather than a single all-in-one tool.
The records were created by the target's own staff, not by or for clients under restrictive contracts.
The target is mostly not consumer personal data or protected health information.
Someone can run exports, and archives have not been deleted.
The combined company will have an authorized sponsor, such as the platform CEO or CFO, who can decide on licensing.

If most boxes are ticked, preserve the archives and revisit after integration. The company fit checker gives a preliminary screen of the combined company later, and the who qualifies page sets out the full baseline.

How the platform raises licensing after close

Once the add-on is integrated, an authorized sponsor, such as the platform CEO or CFO, can authorize a conversation. The sequence that follows is the standard SourceX process:

The platform or its sponsor introduces the company through a referral link or form.
SourceX qualifies size, history, data breadth and rights.
The company completes a data inventory listing systems, years of history and export options.
Price and terms are agreed with the company before buyers see anything.
AI labs and data buyers review; the company decides whether to sign.
If a deal closes, data is delivered under agreed redaction rules and the company is paid.

The platform CEO's side of this is covered in the platform company CEO playbook. For the wider lens on portfolio levers, see the AI value creation playbook for PE operating partners.

Common mistakes

Mistake	Why it hurts	Fix
Adding records value to the bid	A license is uncertain and only the company can sign it	Keep records out of valuation entirely
Waiting until Day 90 to ask about systems	Subscriptions lapse and admin accounts leave with sellers	Put the three-line note in the diligence request
Assuming the add-on owns client data	Outsourcers and agencies often hold records on behalf of clients	Flag client-owned records at screening
Migrating without a full export	Old histories disappear when the platform retires a tool	Require an export before any shutdown

How rewards work for a sponsor

Partners earn 25% of the eligible platform fees SourceX actually collects from the referred company's licensing deals, capped at $100,000 per referred company. The reward is paid only after the buyer pays and SourceX receives its fee; an introduction, meeting or signed agreement alone does not trigger payment, and no reward is guaranteed. It is a share of SourceX's fee and is never deducted from what the company receives. Check your firm's policies on fees connected to portfolio companies, and read the program terms.

When not to bother

Skip the records note when the add-on is a small asset purchase with few employees, when its systems are already being shut down without exports, or when most of its records belong to clients. In those cases the screening effort is better spent elsewhere.

Next step

Add the three-line records note to your next add-on memo. When an integrated company looks like it holds deep records, register as a partner and make the introduction, or have the CEO apply directly at sourcex.si/apply.

Step 1Share your linkSend your personal link to a company you know.
Step 2Company appliesThe company applies itself at /apply.
Step 3Buyer selects and paysThe buyer selects and pays for the data and SourceX receives its fee.
Step 4You get your rewardYour share of SourceX fees becomes payable.

Common questions

Should records depth change what we pay for an add-on?

No. A data license is uncertain, comes after qualification, inventory, rights review and buyer interest, and only the company can sign it. Treat records depth as a note on the integration plan, not as a source of value in the bid. Pay for the business on its operating merits.

What is the cheapest step that keeps the option open?

Take a complete export of every system scheduled for retirement before it is shut down, and name one owner for exports on Day 1. That costs little compared with the permanent loss of a history that existed only inside a canceled subscription.

Which add-ons are least likely to have licensable records?

Small asset deals with few employees, businesses whose records mostly belong to their clients, those holding mainly consumer personal data or protected health information, and companies that deleted archives. A business must also reach 50+ full-time employees at peak, contractors excluded, to meet the baseline.

Who decides on licensing once the add-on is integrated?

The combined company decides, through an authorized sponsor such as the owner, CEO, CFO or another authorized representative. The sponsor firm can make an introduction, but it cannot sign for the company, and nothing is binding until the company agrees price and terms.

Does an add-on acquired earlier still qualify if its systems were retired?

It can, as long as the data still exists. Companies that are acquired or wound down can qualify if the records survive in an export or archive. If every copy was deleted, there is nothing to license, which is why preserving exports at close matters.

Free resources

Cash flow calculator — A 12-month cash forecast with shortfalls highlighted.
Referral earnings calculator — Hypothetical partner earnings with the per-company cap.
Cash conversion cycle calculator — DIO, DSO, DPO and the cash conversion cycle.
All free tools · MCP resource center

By SourceX Partnerships Team · Published 2026-10-09 · Updated 2026-10-09

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