How to screen aerospace and defense suppliers in a PE portfolio for data licensing

Can aerospace and defense suppliers license their records for AI?

Some can, but only after the restricted material is separated out. Aerospace and defense (A&D) suppliers hold a lot of technical data that is export-controlled or marked as controlled unclassified information (CUI), and that data is off the table. The commercial back office around it, such as quotes, supplier coordination, finance operations and internal process records, can still be a fit if the company created it and has the right to license it.

For an operating partner, the work is a sorting exercise. The question for each portfolio company is not "is it A&D?" but "what share of its records sits outside the controlled perimeter, and who can confirm that?" This is general information, not legal, tax or financial advice. Export-control and contract-marking questions belong with the company's trade compliance lead and counsel.

Which A&D records are usually out of scope?

Treat anything the company is required to protect under export rules, a government contract or a prime's flow-down clauses as out of scope until its compliance owner says otherwise.

The point of the table is the default. A record is excluded until someone with authority clears it, not included until someone objects.

Which A&D companies fit the baseline?

Fit still starts with the standard baseline: a US company with 50+ full-time employees at peak (contractors excluded), several years of documented operations, rights to license the data and an authorized sponsor. The who qualifies page has the full list.

A&D adds two practical questions:

• Commercial depth: does the company keep years of connected quoting, ERP, purchasing and finance records, separate from engineering systems?
• Separation: can IT export those commercial systems without pulling in controlled attachments or program folders?

Machine shops, component makers, cable and harness assemblers, finishing and testing houses and aerostructure suppliers with a large commercial aerospace book are the likelier fits. A supplier whose records are nearly all program data for defense customers will usually screen out, and that is a fine answer.

What are the rights and confidentiality pitfalls?

Four pitfalls come up before any buyer sees anything.

1. Export-control status. Technical data tied to defense articles may fall under federal export-control regimes, and who is allowed to see it can itself be restricted. Which rules apply is a question for the company's trade compliance lead and counsel, not the partner.
2. Customer ownership. Primes and OEMs often own or restrict the drawings and data they send. Purchase-order terms and NDAs may bar any reuse.
3. Flow-down clauses. Government contract terms pass down to subcontractors and can limit how records are stored, shared or released.
4. Mixed attachments. An innocuous quote thread may carry a controlled drawing as an attachment. The review has to cover attachments, not only message bodies.

For a company that can pass this review, the general counsel guide sets out how a data license is read from the legal side. Confirm all export-control and contract questions with your own counsel and the company's trade compliance function before acting.

Who inside the portfolio can make the introduction?

The introduction runs through people who already sit close to the controls.

Pulling the compliance lead into the first call, rather than the third, saves time. If the answer is "nearly everything is restricted", you learn that in a week and move on.

How to open the conversation

Lead with the exclusion, not the opportunity. It signals that you understand the sector.

The company fit checker gives a preliminary, non-binding read with no contact details required, and the network opportunity finder helps you think through which portfolio companies to approach first.

How the introduction works

You make the introduction and share basic fit information only. You never export, upload or describe confidential records.

1. You register as a partner and share your referral link, or submit the company through the referral form.
2. SourceX qualifies the company on size, history, data breadth and rights.
3. The company completes a data inventory, listing each system and noting which are excluded as controlled.
4. Price and terms are agreed with the company; redaction rules are set before any work begins.
5. AI labs and data buyers review the opportunity, and buyers typically respond within about two weeks once a company is deal-ready.
6. If the company signs, data is delivered only under the executed agreement and the company is paid; the partner reward follows after SourceX receives payment.

Partners earn 25% of the eligible platform fees SourceX actually collects from the referred company's licensing deals, capped at $100,000 cumulative per referred company. Rewards become payable only after the buyer pays and SourceX receives its fee, and no reward is guaranteed. The reward is a share of SourceX's fee and is never deducted from what the company receives. Check your firm's policies on fees tied to portfolio companies, and read the program terms.

How does this compare with MRO and repair-station businesses?

Aftermarket and repair-station businesses have a different profile: more field and service history, fewer program drawings. The MRO distributors brief covers quote and inside-sales records, which overlap with the commercial layer of an A&D supplier.

When to skip an A&D company

Skip it, or wait, when any of these apply:

• Most records are program engineering data for defense customers.
• Nobody on staff can say what is marked or controlled.
• The prime or OEM owns the data and has not agreed to any reuse.
• Archives were deleted or the ERP was retired without an export.
• The company has fewer people than the 50+ full-time employees at peak baseline.

Next step

Pick one A&D portfolio company, ask its compliance lead what sits outside the controlled perimeter, and run the company fit checker. If the answer is promising, register as a partner and make the introduction, or have the sponsor apply at sourcex.si/apply with your referral link. For wider context on how sponsors organize this work, see the finance transformation guide.