What searchers can do with the deals they passed on, including a licensing introduction

What can a searcher do with the deals they passed on?

A passed deal can stay useful in three ways: keep the owner warm for a later sale, hand it to another buyer with the owner's blessing, or, if the company has 50+ full-time employees at peak (contractors excluded), introduce it to SourceX for a data licensing conversation. Only the third works when the owner never wants to sell.

Plenty of owners never reach a sale. Fortune's coverage of McKinsey's great ownership transfer research reports that 92% of small-business market exits happen through closure and only 5% through a sale. That split covers businesses of every size, most far smaller than the companies SourceX works with, so treat it as context, not a forecast for your list.

An owner who turned down your LOI may still hold years of email, quotes, tickets and financial history. A license could bring the company a one-time payment for those records without a sale, and it gives you a reason to stay in touch that has nothing to do with price.

Why are searchers well placed to make these introductions?

You have already done the slow work: found the owner, earned the first call and often walked the floor. By the time you pass, you usually know rough headcount, operating history, the main systems and whether the owner trusts you.

You also know where the line sits. Anything you saw in a CIM, data room or management presentation is usually covered by your NDA, so the introduction rests only on what the owner chooses to share. If an owner asks what a searcher actually is, point them to this plain explanation of search funds.

Which passed deals are worth a second look?

Sort your dead-deal list by the reason you passed. A few reasons rule out a license; most do not.

If a passed company went to a holdco or an independent sponsor, the approver changes; the holdco vs search fund vs independent sponsor comparison shows who decides in each.

Illustrative: a self-funded searcher passed on a fictional 140-person regional freight brokerage after the owner refused a seller note. The owner still had more than ten years of quotes, carrier emails, claims tickets and dispatch notes across a dozen systems. Three months later the searcher called, asked permission and sent a referral link; the licensing decision stayed with the owner.

The PASS re-screen for dead deals

Ask four questions per passed company. A clear no on any one parks it.

• Peak headcount: did the company reach 50+ full-time employees at peak, contractors excluded?
• Archives: does it hold several years of documented operations across many systems (email, Slack or Teams, CRM, finance, support, operations), and can someone still export them?
• Sponsor and rights: can the owner, CEO, CFO or another authorized representative sign, and did the company create the records it would license?
• Say-so: has the owner agreed to be introduced, and would they consider an exclusive AI-training license for an agreed term?

The company fit checker gives a preliminary, non-binding read on borderline cases, and who qualifies sets out the full baseline.

When should you bring it up with the owner?

Raise it in a live conversation about the owner's plans, never in a mass email to your CRM.

How the introduction works without touching the data room

You make the introduction; SourceX and the owner handle everything after it.

1. Call the owner and ask whether they want to hear about licensing their records. Forward nothing from your diligence files.
2. Register as a partner, then send the owner your referral link (it opens sourcex.si/apply with your code attached) or submit the referral form with only the basic fit details the owner agreed to share.
3. SourceX confirms size, history, systems and rights with the owner directly.
4. The owner's team completes a data inventory of systems, years covered and what can be exported. No records move yet.
5. SourceX and the owner agree one all-in price and the license terms, then AI labs and data buyers review the opportunity.
6. If the owner signs, records are prepared under de-identification and redaction rules agreed before any work begins and delivered only with the owner's authorization. The company receives one payment, typically within about 60 days of the invoice once the buyer has selected the data.
7. Your reward becomes payable only after the buyer pays and SourceX receives its fee.

What to say to an owner you passed on

For an owner you passed on months ago:

Tell the owner plainly that SourceX pays you a share of its fee if a deal closes. The reward never comes out of the company's proceeds, and saying so first protects the relationship.

Is a finder's fee on a passed deal the same thing?

No. A fee for steering a company sale raises different questions from a reward for a data licensing introduction, so know which one you are being offered.

What the rules say: Exchange Act Section 15 makes it unlawful for an unregistered broker to effect, or induce or attempt to induce, securities transactions, subject to listed exceptions, and the statutory M&A broker exemption in Section 15(b)(13) covers only transfers of ownership of eligible privately held companies, under conditions. The SEC proposed a limited finder exemption in 2020 but did not finalize it. Neither was written for data licensing introductions, so do not rely on either. Separately, FINRA Rule 2040 bars member firms from paying an unregistered person who would have to register as a result of receiving the payment.

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

How do rewards work for a searcher?

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, a meeting or a signed agreement alone does not trigger payment, and no reward is guaranteed.

Three points matter for searchers:

• Attribution: credit goes to the first valid referrer whose introduction leads to a verified company application within the attribution window, so agree openly with any broker involved who makes the introduction.
• Your investors: a traditional search fund's investor agreements may address outside income linked to companies reviewed during the search. Read yours and tell your investors first; they can also refer companies themselves through the search fund investor referral program.
• After you close: whether to license your own company's records is a decision you take as CEO, with your board; the referral guide for search fund CEOs and ETA operators covers that side.

When should you leave a passed deal alone?

• The company never reached 50+ full-time employees at peak, contractors excluded.
• You only saw a broker's teaser and never spoke to the owner, or the owner asked you not to call again.
• Your NDA or a broker agreement bars contact outside the sale process, and the broker has not agreed.
• The records mainly belong to the company's clients, or are mostly consumer personal data or protected health information.
• Archives were deleted, or nobody can export from the old systems.
• The data is already licensed to someone else for AI training, or a court, trustee or assignee now controls the assets and has not been involved.

Next step

Run the PASS re-screen on your passed-deal list this week and call the owners who fit. When one agrees, register as a partner and send your referral link, or have the owner apply directly at sourcex.si/apply.