Answers · M&A

What happens to software licenses when a company is acquired?

Short answer: It depends on how the deal is structured and on two clauses in each license. In a stock purchase the licensee stays the same company, so licenses usually carry on, unless a change-of-control clause lets the vendor terminate, renegotiate or require consent. In an asset purchase, and in some mergers, the license has to move to a new entity, which an anti-assignment clause (often extended to assignment "by operation of law") can block without the vendor's consent; in the U.S., non-exclusive intellectual property licenses are generally treated as not transferable without consent unless the license says otherwise. Results vary by contract wording and jurisdiction: a Delaware court held in 2013 that a reverse triangular merger generally is not an assignment by operation of law, for instance. Open-source licenses work differently: they grant rights to anyone who receives the code, and GPL-3.0 expressly passes the predecessor's licenses on in an "entity transaction".

Checklist

1. Inventory every license the target relies on: commercial software and SaaS subscriptions, APIs, data, fonts, media, and open-source dependencies (an SBOM for each product).
2. For each commercial agreement, find the assignment clause, any change-of-control clause, the definition of the licensee and its affiliates, and the termination rights.
3. Map each clause to the deal structure: stock purchase, forward or reverse merger, or asset purchase. The same clause can be harmless in one and a blocker in another.
4. List the consents and notices needed, who gives them and by when; build them into closing conditions for licenses the business cannot run without.
5. Check scope limits the buyer could break after closing: seat or usage caps, named sites or entities, affiliate-only use, field-of-use limits, and clauses barring competitors of the vendor.
6. For open source: confirm license notices and source offers are in order, look for GPL or AGPL code in shipped or network-served products, and for source-available licenses (BUSL, SSPL, Elastic) with production or hosting limits.
7. Plan the transition: who holds the license keys and admin accounts, whether any license fee or transfer fee applies, and audit exposure the buyer inherits.

Stock purchase, merger or asset purchase

• Stock purchase: the licensee entity does not change, so assignment clauses usually aren't triggered; change-of-control clauses are what matter.
• Merger: depends on the form and the law that governs. In Meso Scale Diagnostics v. Roche (Del. Ch. 2013) a reverse triangular merger was held not to be an assignment by operation of law, while forward mergers, where the target disappears into another entity, carry more risk.
• Asset purchase: the license must be assigned to the buyer, so anti-assignment clauses and the default rule for non-exclusive IP licenses apply directly.

Open source in a deal

• Open-source licenses are granted to every recipient of the code, so the buyer generally does not need consent to keep using it; the duties (notices, source offers, share-alike) come along too.
• GPL-3.0 section 10 says that when propagation of a covered work results from an entity transaction, each party that receives a copy also receives the licenses its predecessor in interest had.

License checks (computed)

Yes means the license grants the use, on the duties listed. Duties such as source_disclosure, share_alike and network_source_offer are the ones that conflict with keeping a product closed-source.

Ask Rightshold (free, no key)

Add the MCP server https://www.rightshold.com/mcp to Claude, Cursor, ChatGPT, Grok or VS Code, then ask: “In diligence, which of the target's dependency licenses carry duties if the buyer keeps shipping and hosting the product?”

One-click setup

{
  "tool": "check_rights_batch",
  "arguments": {
    "items": [
      {
        "ref": "web-framework",
        "license": "MIT"
      },
      {
        "ref": "http-client",
        "license": "Apache-2.0"
      },
      {
        "ref": "pdf-engine",
        "license": "GPL-3.0-only"
      },
      {
        "ref": "search-server",
        "license": "AGPL-3.0-only"
      },
      {
        "ref": "database",
        "license": "BUSL-1.1"
      }
    ],
    "intended_use": {
      "commercial_use": true,
      "redistribution": true,
      "deployment": true
    }
  }
}

• license_compatibility checks whether the licenses inside one product can ship together.
• A signed Rights Manifest (issue_rights_manifest) records what was checked for a deliverable, which gives a buyer a dated record to review.

Rightshold reads open-source and other published licenses. It does not read or interpret private commercial contracts, and it does not tell you whether a consent is needed in your deal.

Sources

• GNU General Public License v3.0 (section 10, entity transactions)
• Meso Scale Diagnostics v. Roche Diagnostics (Del. Ch. 2013)
• Apache License 2.0
• NTIA: Software Bill of Materials

Related

• Can I use MIT, GPL or AGPL code in a closed-source SaaS?
• Check all npm dependency licenses before shipping
• Can I use BUSL-1.1 software in production?

Not legal advice. Updated 2026-10-29. JSON · Markdown · All answers

curl -s -X POST https://www.rightshold.com/v1/accounts/signup -H "Content-Type: application/json" -d '{"accept_terms":true}'
export RIGHTSHOLD_API_KEY=rs_...   # the api_key from the reply (shown once)
curl -s https://www.rightshold.com/v1/licenses/check -H "Authorization: Bearer $RIGHTSHOLD_API_KEY" \
  -H "Content-Type: application/json" -d '{"license":"MIT","intended_use":{"commercial_use":true}}'