How search fund CEOs create value after the acquisition, including a records check

How search fund CEOs create value after the acquisition

A search fund CEO creates value by protecting what the founder built, professionalizing how the company runs, and then growing it over a multi-year hold. The early job is to keep customers and key employees while building the reporting the board needs; the bigger moves come once the CEO understands the business.

The work tends to run in three phases:

The supply of businesses for searchers keeps growing. McKinsey's research on the great ownership transfer finds that more than half of US small-business owners are over 55, up from roughly 30 percent in 2002, and estimates that about six million small and medium-size businesses will face ownership transitions by 2035. Founder-run companies that have operated for decades can carry long operating histories that nobody has looked at as an asset.

Why the new CEO is well placed to spot a records asset

In the first months the CEO sees everything: every system the seller handed over, every shared drive, the accounting server in the back office and the mailbox the founder used for twenty years. A PE operating partner has to ask for that view. A searcher-CEO already has it, and is also one of the roles that can act as the company's authorized sponsor.

That combination makes a records check easy to fold into the systems review you are already running in the search fund first 100 days. The outcome is either a short note for the board or a new, non-dilutive option: cash paid to the company for a license, with no equity issued and the records still owned by the company.

Which acquired companies fit

Fit depends on size, history and how the work was recorded, not on whether the company builds software.

Acquisitions in B2B services, IT services, logistics and distribution, insurance services and engineering often show these signals once the company is large enough. The who qualifies page has the full baseline.

The RRA check: records, rights and authority in one pass

Run all three parts together with your controller and whoever manages IT. A clear no on any line means stop or wait.

Records

• The company reached 50+ full-time employees at peak (contractors excluded).
• Several years of documented operations exist in systems you can still open.
• You can name each system and the earliest year of records in it.
• Systems the seller used before the sale, including backups and archived mailboxes, can still be exported.

Rights

• The acquisition gave the company the records: either you bought the company itself, or the asset purchase agreement listed books, records and systems among the acquired assets.
• The records were created by employees in their jobs, or contractor work was assigned to the company in writing.
• Customer contracts and NDAs do not bar the use, and client-owned material is kept separate.
• The records are not mainly consumer personal data or medical records and claims.
• The same records have not already been licensed for AI training.

Authority

• You know who signs: the CEO alone, or the board under the consent rights in the operating agreement for significant or exclusive contracts.
• Your senior lender's credit agreement has been checked for limits on licensing company assets.
• Any seller note or earnout has been reviewed for consent or notice terms.
• You and the board are open to granting an exclusive license for AI training over an agreed term.

On the rights questions, the Copyright Act's ownership section provides that the employer owns a work made for hire unless the parties agree otherwise in a signed writing, and that ownership can be transferred in whole or in part. Whether the records and rights moved to you in an asset deal turns on the purchase agreement; the explainer on who owns business records after an asset sale walks through how that differs from a stock sale. This is general information, not legal, tax or financial advice. Confirm with your deal counsel before acting.

When to bring it to the board

Bring facts, not a pitch, at a moment when the board is already discussing systems, cash or strategy.

The guide on the exit story and the value creation plan shows where a completed license sits in that narrative.

What to say to your board

How the process works, from either side

If you run the company, apply directly at sourcex.si/apply. If you know another searcher or an investor-backed company that fits, register as a partner and send them your referral link or use the referral form. Either way, the steps are the same:

1. The company applies or is introduced.
2. SourceX qualifies it: size, length of history, how broad the data is, and whether the company holds the rights.
3. The company completes a data inventory of its systems, years of history and export options.
4. Price and terms are agreed as a single all-in figure that already covers SourceX's fee, with nothing billed separately.
5. Buyers look at the opportunity, and once a company is deal-ready they typically reply within about two weeks.
6. The license is signed, redaction rules settled before work began are applied, the data is delivered, and payment arrives as a single sum, usually within about 60 days of invoicing after the buyer has selected the data.

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. Nothing is owed to a partner until the buyer's payment reaches SourceX and its fee is collected; no reward is guaranteed, and the reward comes from SourceX's share rather than the company's. See rewards for how the formula works, while the program terms set who is eligible.

Treat any license as upside outside the base case. It is one-time, it depends on buyer demand, and it should not be pledged to a lender or promised to investors before it is signed.

When not to pursue it

• The company sits outside the size baseline of 50+ full-time employees at peak (contractors excluded).
• The seller kept the records as excluded assets, or they were deleted at handover.
• The records mainly belong to clients, as with a bookkeeping firm's client files.
• The data is mostly consumer personal information or medical records.
• The board or lender will not consent, or you would not consider an exclusive license.
• The business is in a customer or staff crisis; park the idea until things settle.

Next step

Run the RRA check during your systems review and test the result with the company fit checker, then apply at sourcex.si/apply if the company fits. If you know other searchers whose companies might qualify, register as a partner and introduce them.