Underperforming portfolio company options, and where its records fit

An underperforming portfolio company usually has seven paths: turn it around, recapitalize, sell it, merge it into another holding, run a distressed sale, assign its assets, or wind it down. Before any path that retires systems, a sponsor can also screen whether years of operating records could be licensed for AI training as additional recovery.

What are the options for an underperforming portfolio company?

A sponsor with a company that keeps missing plan usually chooses among seven paths: fix it, recapitalize it, sell it, fold it into another portfolio company, run a distressed sale, hand the assets to an assignee or trustee, or wind it down. Before any path that switches systems off, one more question deserves a week of work: could the company's operating records be licensed as additional recovery?

Holds are getting longer, which gives more companies time to miss plan. Bain's Global Private Equity Report 2026 counts about 32,000 unsold portfolio companies worth $3.8 trillion and reports that almost 40% of portfolio companies have been held for more than five years. Older holds that miss plan end up in exactly this decision.

Option	When it fits	What happens to the records	Licensing angle
Operational turnaround	The model works but execution failed	Systems stay live and records keep growing	Screen at any time; proceeds can help fund the plan
Recapitalization or amend-and-extend	Lenders and sponsor will give the plan more time	Systems stay live; lenders may hold the IP as collateral	Check whether an exclusive license needs lender consent
Sale to a strategic or financial buyer	Someone values the customers or capabilities more than you do	Records transfer with the company	Agree with the deal team whether to license before or after
Merger into another portfolio company	Customers, products or back office overlap	Legacy tools are migrated, then cancelled	Preserve full exports before old systems close
Distressed sale, in or out of court	Value is falling and time is short	Records go with purchased assets or stay with the seller or estate	The court, trustee or buyer must be part of any license
Assignment for the benefit of creditors	State-law liquidation without a bankruptcy filing	An assignee holds and sells the assets	The assignee typically controls any license
Orderly wind-down or write-off	No buyer at a price that clears the debt	Subscriptions lapse, admins leave, archives risk deletion	Highest urgency: export before systems go dark

Why the records matter at this moment

A shrinking company is where history disappears: cost cuts cancel software licenses, the IT lead who knew the export settings leaves, and migrations carry over only open records. The closed history is what matters to AI labs and data buyers: years of tickets with resolutions, CRM deals won and lost, engineering reviews, and the email and chat threads around real decisions. Developers training and evaluating agents that do multi-step work need exactly these records, and they barely exist on the public web.

Status does not rule a company out. Companies that are still operating, already acquired or wound down can all qualify if the data still exists. The operating partner referral page describes how sponsors raise this across a portfolio.

Keep expectations sober. A license pays once for a defined set of records, and nothing binds until the company agrees price and terms and signs. It should never become the reason a hard decision gets delayed.

The KEEP screen before any write-off

Four checks decide whether the records are worth preserving for a licensing review. If two or more fail, record the decision and move on.

Kept: archives, mailboxes, chat history and ticket histories still exist, ideally five years or more, including systems already retired.
Entitled: the company created the records, and its customer contracts, privacy notices and employee policies allow licensing; the material is not mainly clients' confidential data, consumer personal data or health records.
Exportable: someone with admin rights can still produce complete exports, and each vendor's retention terms for cancelled accounts are known.
Permissioned: an owner, CEO, CFO or other authorized representative can sign, and anyone who now controls the assets, such as a court, trustee or assignee, is part of the conversation.

The baseline still applies: 50+ full-time employees at peak (contractors excluded) and several years of documented operations. Peak is the point. A company that has since cut deep can still qualify on the records it built when it was larger. The who qualifies page has the full criteria.

Timeline: what to do around the decision

Timing	Where the company is	What to do about the records
During the strategic review	Board compares fix, sell, merge and wind-down	Run the KEEP screen; ask the CFO which systems exist and how far back each goes
When a path is chosen	Board approves; advisers engaged	Instruct management not to cancel or purge any system until exports are confirmed
Before announcements and layoffs	Key staff still in place	Identify who holds admin rights for each system and write down the export steps
Before signing or filing	Purchase agreement, assignment or petition in draft	Decide with counsel whether records are included in or excluded from the assets sold
After filing or assignment	Debtor in possession, trustee or assignee in control	Route any license discussion through whoever controls the assets
Final weeks of a wind-down	Subscriptions ending, last payroll run	Confirm complete exports sit in company-controlled storage before each system closes

Timing depends on the path, the lenders and any court, so read the table as an order of operations.

When a court, trustee or assignee controls the assets

Once a company files or assigns its assets, its records are part of what someone else controls, and neither the sponsor nor a referral partner can license them alone. In chapter 11 the debtor usually stays in control as debtor in possession and proposes a plan, while in chapter 7 a trustee sells nonexempt property and distributes the proceeds, as the federal judiciary's chapter 11 overview and its companion pages explain.

Personal information adds a layer. Under 11 U.S.C. section 363(b)(1), if the debtor's privacy policy prohibited transferring personally identifiable information to unaffiliated persons, the trustee may not sell or lease that information unless the sale is consistent with the policy or the court approves it after a hearing and the appointment of a consumer privacy ombudsman under 11 U.S.C. section 332.

Assignments for the benefit of creditors run under state law, and procedures differ. Florida's chapter 727, for example, places the process under circuit court supervision; check the current statute in the company's own state.

This is general information, not legal, tax or financial advice. Confirm with your own counsel, tax adviser or professional body before acting.

Who to involve

Person	Why they matter	What to ask
CEO or owner	Authorized sponsor for any license	Would you consider an exclusive AI-training license for an agreed term?
CFO or controller	Knows the systems, contracts and cash runway	Which systems hold the longest history, and what do they cost to keep?
IT lead or managed service provider	Holds admin rights and export know-how	Can we export each system completely before it is cancelled?
Company counsel	Rights, privacy notices, customer contracts	Do our contracts and notices allow licensing these records?
Chief restructuring officer or turnaround adviser	Runs the recovery plan	Can a records screen run alongside the asset sale process?
Lenders and their counsel	May hold the IP as collateral	Would an exclusive license need consent?

What to say to the board

What to preserve before systems go dark

The company does this work, not the partner, and nothing leaves company-controlled storage without an executed agreement. The data inventory builder helps management list what exists.

Email: mailbox exports or the archive, including former employees' mailboxes still under retention.
Chat: Slack or Teams workspace exports with channel history.
CRM: accounts, opportunities with stage history, activities and notes.
Support: tickets with comments, status changes and resolutions.
Engineering: code repositories, pull requests and issue trackers such as Jira.
Finance and operations: general ledger detail, purchase orders, project files and SOPs.
Shared drives: proposals, reports and decision documents, with folder structure intact.
Call recordings: only where callers received recording notices.

De-identification and redaction rules are agreed with the company before any work begins.

How the introduction and reward work

You register and either send the CEO or CFO your referral link, which opens sourcex.si/apply with your code attached, or submit the company through the referral form.
SourceX checks size, history, data breadth and rights, and asks who controls the assets today.
The company lists its systems, years of history and export status in a data inventory.
SourceX and the company agree one all-in price and the terms; nothing binds until the company signs.
AI labs and data buyers review the opportunity.
After an executed agreement, the company delivers data under the agreed redaction rules and receives a one-time payment, typically within about 60 days of invoicing once the buyer selects the data.

The partner reward is 25% of the eligible platform fees SourceX actually collects from the company's licensing deals, up to $100,000 per referred company, payable only after the buyer pays and SourceX receives its fee. It is never deducted from what the company receives, and rewards are not guaranteed. Log what you shared and when with the company introduction record template, and read who gets paid when a portfolio company licenses its data before accepting any reward linked to a company your fund owns.

When to skip the records screen

The archives are already gone, or nobody can export them.
The records mostly belong to the company's clients, as at agencies and outsourcers, and those clients have not consented.
The data is mainly consumer personal data or protected health information.
The company never reached 50+ full-time employees at peak (contractors excluded).
The same data has already been licensed for AI training.
A court, trustee or assignee controls the assets and has not been involved.

Next step

Take the weakest company in your next portfolio review through the KEEP screen before the board meets. If it passes, register as a partner and send the CEO your referral link, or ask them to apply at sourcex.si/apply. For the wider question of whether a portfolio company may license its records at all, read can a PE portfolio company license its data to AI labs.

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

Can a company that has already shut down still license its records?

Yes, if the records still exist and someone with authority can sign. Companies that are still operating, acquired or wound down can all qualify. The practical questions are who now controls the archives, whether complete exports were taken before systems were cancelled, and whether a court, trustee or assignee has to approve. Without preserved exports there is nothing to license.

Does a records screen delay a distressed sale or wind-down?

It should not. The screen runs alongside the main process, and the only immediate ask is to keep systems and exports intact. Pricing, terms and buyer review follow their own track. If the sale or wind-down timetable cannot wait, preserving full exports in company-controlled storage keeps the option open without holding anything else up.

Who receives the license payment if the company is in bankruptcy or an assignment?

The payment belongs to the company or its estate and is handled through whatever process controls the assets, whether that is a debtor in possession, a trustee or an assignee. The sponsor gains no separate claim to it by making the introduction. Any partner reward is paid by SourceX from its own fee and never comes out of the company's proceeds.

Do lenders have to approve a license of a struggling company's records?

Sometimes. If the credit agreement pledges the company's intellectual property or restricts dispositions, an exclusive license may need lender consent or may send proceeds toward repayment. Raise it with lender counsel before terms are agreed. In a restructuring the lenders are usually already at the table, which makes the question easier to ask early.

Which records are most worth saving from a struggling company?

Records that show complete pieces of work with outcomes: support tickets with resolutions, CRM opportunities with stage history and win or loss reasons, engineering pull requests and reviews, project files with approvals, and the email or chat threads around decisions. Long histories and archives from retired systems add depth, so protect those first when subscriptions are being cut.

Is a records screen worth it if the company is much smaller today?

It can be. The size test looks at 50+ full-time employees at peak, contractors excluded, so a company that has shrunk after a bad stretch may still qualify on the records it built at its largest. What matters is that the history still exists, the company holds the rights, and an authorized sponsor will consider an exclusive license.

Free resources

Cash conversion cycle calculator — DIO, DSO, DPO and the cash conversion cycle.
Operational data inventory builder — List systems, record types, years held and owners.
AI readiness assessment — Ten questions, five dimensions, a score out of 100.
All free tools · MCP resource center

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

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