{
  "question": "What happens to software licenses when a company is acquired?",
  "slug": "what-happens-to-software-licenses-in-an-acquisition",
  "url": "https://www.rightshold.com/answers/what-happens-to-software-licenses-in-an-acquisition",
  "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": [
    "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).",
    "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.",
    "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.",
    "List the consents and notices needed, who gives them and by when; build them into closing conditions for licenses the business cannot run without.",
    "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.",
    "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.",
    "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."
  ],
  "sections": [
    {
      "heading": "Stock purchase, merger or asset purchase",
      "points": [
        "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."
      ]
    },
    {
      "heading": "Open source in a deal",
      "points": [
        "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."
      ]
    }
  ],
  "checks": [
    {
      "label": "Shipping a modified GPL-3.0 component in a product after the deal",
      "license": "GPL-3.0-only",
      "license_name": "GNU General Public License v3.0",
      "intended_use": {
        "commercial_use": true,
        "redistribution": true,
        "modification": true
      },
      "verdict": "permitted",
      "answer": "Yes",
      "findings": [
        "Every use you described is granted by GPL 3.0, and nothing you described is prohibited."
      ],
      "duties": [
        "attribution",
        "license_notice",
        "state_changes",
        "share_alike",
        "source_disclosure"
      ],
      "official_text": "https://www.gnu.org/licenses/gpl-3.0.html"
    },
    {
      "label": "Running a modified AGPL-3.0 component as part of the acquired SaaS",
      "license": "AGPL-3.0-only",
      "license_name": "GNU Affero General Public License v3.0",
      "intended_use": {
        "commercial_use": true,
        "modification": true,
        "deployment": true
      },
      "verdict": "permitted",
      "answer": "Yes",
      "findings": [
        "Every use you described is granted by AGPL 3.0, and nothing you described is prohibited."
      ],
      "duties": [
        "attribution",
        "license_notice",
        "state_changes",
        "share_alike",
        "source_disclosure",
        "network_source_offer"
      ],
      "official_text": "https://www.gnu.org/licenses/agpl-3.0.html"
    }
  ],
  "checks_note": "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": {
    "start": "https://www.rightshold.com/start?ref=answers",
    "mcp_endpoint": "https://www.rightshold.com/mcp",
    "ask": "In diligence, which of the target's dependency licenses carry duties if the buyer keeps shipping and hosting the product?",
    "mcp_call": {
      "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
        }
      }
    },
    "also": [
      "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."
    ],
    "scope": "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": [
    {
      "title": "GNU General Public License v3.0 (section 10, entity transactions)",
      "url": "https://www.gnu.org/licenses/gpl-3.0.html"
    },
    {
      "title": "Meso Scale Diagnostics v. Roche Diagnostics (Del. Ch. 2013)",
      "url": "https://law.justia.com/cases/delaware/court-of-chancery/2013/ca-5589-vcp.html"
    },
    {
      "title": "Apache License 2.0",
      "url": "https://www.apache.org/licenses/LICENSE-2.0"
    },
    {
      "title": "NTIA: Software Bill of Materials",
      "url": "https://www.ntia.gov/page/software-bill-materials"
    }
  ],
  "related": [
    {
      "title": "Can I use MIT, GPL or AGPL code in a closed-source SaaS?",
      "url": "https://www.rightshold.com/answers/can-i-use-mit-gpl-or-agpl-code-in-a-closed-source-saas"
    },
    {
      "title": "Check all npm dependency licenses before shipping",
      "url": "https://www.rightshold.com/answers/how-to-check-licenses-of-all-npm-dependencies-before-shipping"
    },
    {
      "title": "Can I use BUSL-1.1 software in production?",
      "url": "https://www.rightshold.com/answers/can-i-use-busl-1-1-software-in-production"
    }
  ],
  "computed_from": "Curated guidance; license verdicts computed from Rightshold's license profiles at render time. Not legal advice.",
  "updated": "2026-10-29"
}