Shutting down a business unit: the records plan for operating partners

What is the records plan for shutting down a business unit?

Before a division is closed, assign an owner to each of its systems, decide what is preserved, and check whether the unit's history could be licensed before anything is switched off. The plan fits into one leadership meeting and a short owner list, and it is far easier than trying to rebuild an archive after the systems are gone.

Closing a division retires its systems and scatters its team. The CRM is cancelled, the shared drive is archived, the Slack channels go quiet and the people who know where things live take other jobs. Operating partners usually see the cost savings first. The records plan makes sure the unit's history is a decision, not a casualty.

Closure or divestiture: which path are you on?

The plan differs depending on where the records go.

This page covers the first row. If a sale is in play, the deal team and counsel decide the records first.

Which units are worth a records review?

A unit does not need to qualify by itself in the plan, but the company it belongs to must meet the baseline: 50+ full-time employees at peak (contractors excluded), several years of documented operations, rights to license the data and an authorized sponsor.

• The unit ran its own systems, such as a CRM, help desk, ERP module or engineering tools
• It operated for several years, so the history shows how work and decisions evolved
• Its records show outcomes: deals won and lost, tickets resolved, projects delivered
• The portfolio company created the records and holds the rights, not clients or a former owner
• Someone can still export the data
• The CEO, CFO or another authorized representative will consider a license

The closure timeline

The wind-down budget guide covers keeping systems alive long enough for an assessment, and the office closure checklist handles the physical side.

What to say to the portfolio CEO

Avoid promising amounts. Whether a unit's records have buyer interest depends on breadth, depth and rights, and nothing is binding until the company agrees price and terms and signs.

Who needs to be in the room

A closure decision is made by a handful of people, and each has a different stake in the records.

• The operating partner or board member sets the direction and asks the records question early.
• The portfolio CFO owns the closing budget and the cost of keeping systems alive.
• The head of IT or the unit's systems administrator knows where the data lives and who can run exports.
• Counsel confirms retention obligations, client consent and employee notices before any records are touched.
• The unit leader knows which records matter and which people will leave first.

Hold one 30-minute meeting with these people before the announcement. The output is a one-page list: system, owner, export status and retention decision. Without that page, the default outcome is deletion by cancellation.

What a records review does not change

A licensing review does not delay a closure. Qualification and the data inventory run in parallel with the wind-down, and the company decides whether to proceed at each step. The company can say no at any point before it signs.

How the introduction works

1. You register as a partner and share your referral link, or submit the company with the referral form.
2. SourceX checks size, history, data breadth and rights with the sponsor.
3. The company completes a data inventory of the unit's systems and years of history.
4. Price and terms are agreed with the company before buyers are approached.
5. AI labs and data buyers review; once deal-ready, buyers typically respond within about two weeks.
6. If a deal closes, the data is delivered under the agreed redaction rules and the company is paid.

Partners never export, upload or describe confidential records. See the referral opportunities for private equity operating partners for the wider role.

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. Check your fund's own policies on accepting fees connected to portfolio companies before you register. The program terms have the current details.

When a closure is not a licensing candidate

• The unit's records belong mostly to its clients, and those clients have not consented.
• The data is mainly consumer personal information or protected health information without a licensing basis.
• Systems were already cancelled with no export.
• A court, trustee or assignee controls the assets and has not been involved.
• The owner will not consider an exclusive license.

Retiring owners create a similar pattern; see what happens to the records of retiring owners' companies. At year end, the year-end close checklist is a handy place to add a records review line.

Next step

Add "records owner and retention decision" to the closure workplan this week. If the parent company fits, register as a partner and make the introduction, or check the baseline on the who qualifies page.