How to describe a client's data assets in a CIM without exposing confidential records

The short answer: describe the records, never their contents

A CIM should treat data assets the way it treats equipment or key contracts: say what exists, how much history it covers, who owns it and what limits its use. In practice that means naming the systems, the years each one covers, the workflows and outcomes they capture and the rights position, all at metadata level. No ticket, email, file or customer name from those systems belongs in the memorandum.

Many bidders now read a CIM with AI in mind. A strategic acquirer may ask whether the target's operating history could train or test its own tools; a financial sponsor may ask whether the records belong in the value creation plan. A short, factual data assets subsection answers both before the first management meeting, and it keeps the advisor from calling a help desk archive a moat without evidence.

The usual home is a one- or two-page subsection under technology and systems, or under operations, ahead of the financials. The blind teaser carries one general line at most, the detail waits for the CIM that bidders receive after signing the NDA, and the evidence waits in the data room. The guide to sell-side M&A process steps shows where a data licensing track fits around those documents.

What you need before you draft

Collect four inputs before writing a word. If one is missing, the section will be vague at best and wrong at worst.

• A metadata-only systems inventory: each system, the year its history starts, the record types it holds, whether a complete export is possible and who administers it. No samples and no exports.
• A rights picture: which records the company created, which client contracts restrict use of project data or deliverables, what the privacy policy and employee notices say, and which records belong to clients.
• The license status: none, being assessed, terms under negotiation, signed, or signed and delivered, with any agreement in counsel's hands.
• Named approvers: the CEO or CFO for business facts, deal counsel for rights and confidentiality wording, and the IT or operations lead for system facts.

How to write the data assets section, step by step

1. Give it a heading. Put data assets under its own heading within technology and systems so it appears in the table of contents. A paragraph buried in operations does not get read.
2. Open with one summary sentence. State the span of history, the number of systems and the main workflows covered, for example (Illustrative): twelve years of service, sales and engineering records across 14 systems.
3. Add a systems table. One row per system category, with columns for years of history, what each record captures, the outcome fields it holds and whether a complete export is possible. Use categories such as help desk, CRM, issue tracker and ERP; name vendors only if the client is comfortable.
4. Describe two or three end-to-end workflows. Request to resolution, quote to cash, requirement to release. Workflows that run across linked systems are what make operational records useful to AI developers training agents to carry out multi-step work.
5. State the rights position plainly. Records created by employees in the ordinary course, client-owned data and deliverables excluded, privacy commitments honored, retention policy in force. If a category is uncertain, say it is under review instead of claiming it.
6. Disclose any license. Use the status table below, and keep the wording identical to what counsel approves for the disclosure schedule.
7. Keep one-time proceeds out of recurring revenue. Show a paid license as a separate, non-recurring line so the quality of earnings work does not strip it out for you. Whether license revenue is recognized at a point in time or over the term depends on whether the customer receives a right to use or a right to access the licensed material under ASC 606 licensing guidance, so let the company's auditors decide and mirror their treatment.
8. Point to the evidence. Close by noting that a system-level inventory and, under clean-team access, any license agreement are available in the data room.

How to disclose a completed or proposed license

What the CIM says depends on where the license stands. In every case, read the license's confidentiality clause with counsel before naming the licensee, the price or the delivery terms.

Public filings show how to describe value and term without naming counterparties. In its February 2024 registration statement, Reddit described data licensing arrangements entered into in January 2024 by their aggregate contract value of $203.0 million and terms of two to three years, without naming the licensees. A private company's CIM can follow the same pattern: aggregate terms and no names, unless the agreement allows more.

A signed license also belongs on the purchase agreement's schedules; the guide to listing a data license on the M&A disclosure schedule covers that wording.

Wording that works, and wording that backfires

Three habits undo otherwise good drafting:

• Putting a value on the records. A number invites bidders to discount it and stakes the advisor's credibility on an estimate nobody can support.
• Using adjectives in place of facts. A unique proprietary dataset tells a buyer nothing; nine years of resolved tickets with outcome fields tells them a great deal.
• Implying a license will happen. A license under assessment is not revenue, and nothing is binding until the company signs.

Common mistakes and how to fix them

Illustrative example: one section, two drafts

Illustrative and fictional. An advisor is preparing a CIM for Harbor Lane Software, a 160-employee vendor of warehouse management software. The first draft calls the company's records a valuable proprietary dataset. After a metadata-only inventory, the second draft lists 11 systems, gives the years of history for the help desk, CRM and code repositories, walks through the implementation workflow from signed order to go-live, and states that customer warehouse data is excluded.

The company had been introduced to SourceX before the process started, so the second draft also says a license for AI training is under negotiation and that nothing is binding until signed. When bidders asked about exclusivity and term, the answers were already in the data room.

Should the license come before the CIM?

Deciding before the CIM is drafted is usually cleaner, because the section can then state a fact instead of a plan. The trade-offs are set out in should a company license its data before selling the business. Advisors who raise the topic at the pitch can show the client a data assets slide in the pitch book, and offering a data asset review can itself help win the mandate.

If you introduce the client, your part ends with the introduction. SourceX qualifies the company, the company completes its own inventory, and the owner agrees price and terms and decides whether to sign; you never see or handle the records. 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, and rewards become payable only after the buyer pays and SourceX receives its fee. The reward comes out of SourceX's fee and never reduces what the client receives, and no reward is guaranteed. Disclose it to the client in writing and check your firm's policy on outside compensation.

This is general information, not legal, tax or financial advice. Confirm CIM wording with deal counsel and the accounting treatment with the company's auditors.

Next step

Before drafting the section, run the client through the company fit checker. If the screen is positive, register as a partner to introduce the CEO yourself, or send them your referral link so the company can apply at sourcex.si/apply with your credit attached. More sell-side playbooks are on the M&A advisors page.