# 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.

- **Shipping a modified GPL-3.0 component in a product after the deal: Yes.** [GNU General Public License v3.0](https://www.gnu.org/licenses/gpl-3.0.html) (`GPL-3.0-only`) Duties: attribution, license_notice, state_changes, share_alike, source_disclosure. Every use you described is granted by GPL 3.0, and nothing you described is prohibited.
- **Running a modified AGPL-3.0 component as part of the acquired SaaS: Yes.** [GNU Affero General Public License v3.0](https://www.gnu.org/licenses/agpl-3.0.html) (`AGPL-3.0-only`) Duties: attribution, license_notice, state_changes, share_alike, source_disclosure, network_source_offer. Every use you described is granted by AGPL 3.0, and nothing you described is prohibited.

## Ask Rightshold (free, no key)
Add the MCP server https://www.rightshold.com/mcp to Claude, Cursor, ChatGPT, Grok or VS Code (one-click setup: https://www.rightshold.com/start?ref=answers), then ask: "In diligence, which of the target's dependency licenses carry duties if the buyer keeps shipping and hosting the product?"

```json
{
  "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)](https://www.gnu.org/licenses/gpl-3.0.html)
- [Meso Scale Diagnostics v. Roche Diagnostics (Del. Ch. 2013)](https://law.justia.com/cases/delaware/court-of-chancery/2013/ca-5589-vcp.html)
- [Apache License 2.0](https://www.apache.org/licenses/LICENSE-2.0)
- [NTIA: Software Bill of Materials](https://www.ntia.gov/page/software-bill-materials)

## Related
- [Can I use MIT, GPL or AGPL code in a closed-source SaaS?](https://www.rightshold.com/answers/can-i-use-mit-gpl-or-agpl-code-in-a-closed-source-saas)
- [Check all npm dependency licenses before shipping](https://www.rightshold.com/answers/how-to-check-licenses-of-all-npm-dependencies-before-shipping)
- [Can I use BUSL-1.1 software in production?](https://www.rightshold.com/answers/can-i-use-busl-1-1-software-in-production)

_Not legal advice. Updated 2026-10-29. JSON: https://www.rightshold.com/answers/what-happens-to-software-licenses-in-an-acquisition.json_