How a dual-track M&A process works, and where a data license fits as a third track

What a dual-track M&A process is

A dual-track M&A process prepares a company for two outcomes at once, usually a full sale and a recapitalization, and keeps both alive until the owner can compare firm offers. For larger sponsor-backed companies the second track is sometimes an IPO; for most private middle-market companies it is a majority or minority recap with a private equity investor, or a dividend recap funded by lenders.

The point is leverage and optionality. Bidders on the sale track know the owner has a credible alternative, and the owner does not have to decide whether to sell everything until the price of each path is on the table.

How the two tracks run side by side

The process letter guide shows what bidders receive in each round. In a dual track, bidders read those letters closely for signs of how committed the seller is.

When a dual track helps and when it backfires

It helps when the owner is genuinely undecided, when performance supports leverage, and when markets are uncertain enough that a fallback has value. Sponsors weigh the same choice across whole portfolios: Bain's 2026 report found that buyout holding periods at exit are now around seven years, up from an average of five to six years between 2010 and 2021, as general partners hold assets longer to grow EBITDA. A recap or partial sale lets them return capital without a full exit.

It backfires in three ways:

• Management bandwidth splits across two sets of meetings, models and diligence requests.
• Information leaks across tracks if the data room is not staged and investor materials reach strategic bidders.
• Bidders hold back if they suspect they are only setting a price for the recap.

Where a data license fits: the third track

A data license is a third track that does not compete with the other two. The company licenses an agreed set of its operational records, such as CRM histories, support tickets, engineering reviews and internal documents, to AI labs and data buyers for a one-time payment. Ownership does not change, no equity is issued and no lender is involved.

It works alongside either outcome because it answers a different question. The sale and recap tracks decide who owns the company and how it is financed; the license track decides whether the company's operating history earns cash on its own. The guide on assessing sales playbooks and CRM process histories shows the kind of records that tend to qualify, and the guide to building an M&A buyer list explains why data buyers stay off the acquisition list.

How the third track runs in practice:

1. During preparation, check the basics: is this a US company that reached 50+ full-time employees at peak (contractors excluded), with several years of documented operations, rights to its records and a sponsor who can sign? The company fit checker gives a preliminary, non-binding read.
2. Preserve archives before the system clean-up that a sale process often sets off.
3. Introduce the company to SourceX; the advisor never handles or describes confidential records.
4. Company staff complete a data inventory with SourceX, off the deal team's critical path.
5. SourceX and the company agree one all-in price and terms, with SourceX's fee included and no separate charges.
6. AI labs and data buyers review; with a deal-ready company, responses typically arrive within about two weeks.
7. The company signs, delivers under the redaction rules it agreed, and is typically paid within about 60 days of invoicing once the buyer selects the data.

When to disclose the license to bidders

Disclose it, and decide early when. These licenses are typically exclusive for AI training for an agreed term, so any acquirer or investor inherits that commitment.

Expect quality-of-earnings work to treat license proceeds as non-recurring and remove them from adjusted EBITDA. Revenue recognition can depend on structure: guidance on ASC 606 licenses of intellectual property distinguishes a right to use from a right to access, so the company's auditors should weigh in before anyone models timing. This is general information, not legal, tax or financial advice. Confirm with your own counsel or accountant before acting.

If an AI company approaches the client directly about its data mid-process, the answer on what to do when an AI company offers to buy a client's data during a sale covers the next steps.

What it means for the advisor

For a sell-side advisor, the license track adds proceeds without widening the auction or delaying signing, and it keeps something of value moving if both main tracks stall. You make the introduction; SourceX and the company handle the rest.

Raise it with the owner during preparation, before the CIM is final:

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, paid only after the buyer pays and SourceX receives its fee. The reward is a share of SourceX's fee and never reduces the client's proceeds. Check your engagement letter and your firm's policies before accepting any referral compensation, and disclose it to the client. The M&A advisors partner page covers the program for sell-side teams.

Limits

• A license will not rescue a process where neither track produces an acceptable offer; it is one-time cash, not a valuation fix.
• A strategic buyer with its own AI plans may object to an exclusive AI-training license, so surface it before bids are due.
• Records that belong to the company's clients, data that is mainly consumer personal information, or data already licensed for AI training will not qualify.
• No payment is certain until a buyer selects the data and pays.

Next step

Screen one current mandate against the baseline this week. If it fits, register as a partner and introduce the company, or send the owner your referral link so they can apply at sourcex.si/apply.