Oracle ULA M&A Clauses: Issues to Check

The short answer: in most Oracle ULAs, a company you acquire cannot use the ULA products, and if you are acquired, the ULA ends and must be certified. Mergers and acquisitions are a big source of revenue for Oracle, especially around ULAs. Check the M&A clauses before any deal.

Software licensing due diligence in M&A

An acquisition or merger is a large financial step. Skipping due diligence can cost even more, because the acquiring company can be held liable for software licenses that the acquired entity was responsible for obtaining.

The acquirer should therefore review the target’s intellectual property, including its software licenses, and put steps in place to reduce the risks it finds.

Whose responsibility is it, the CIO’s or the CFO’s?

Many businesses leave software licensing to IT managers, but the financial cost of non-compliance sits with the CFO. In the rush of a merger or acquisition, licensing is easily forgotten. Both the CFO and the CIO must take responsibility for managing the company’s software assets.

Issues in Oracle ULA M&A clauses

These are the key points of the merger and acquisition clauses in Oracle ULAs.

If you acquire or merge with another company

1. The acquired entity cannot use the ULA. In most Oracle ULAs, the acquired entity cannot use the products in the ULA. Some ULAs have clauses that allow it, but then the size of the acquired entity is defined, by revenue, number of employees or another publicly auditable metric.
2. Payment for use of ULA products. If the acquired entity wants to use the ULA products, the contracting entity must pay additional fees for licenses and support.
3. Loss of unlimited deployment rights. If the acquired entity has Oracle licenses, support for them must be paid. If it is not paid, the contracting entity loses the rights of the ULA.

If you are acquired

The ULA ends if the contracting company is acquired, and the ULA must be certified. No fees are refunded if the termination comes earlier than the contracted period.

How we can help

We have helped organizations carry out due diligence before an acquisition and integrate their ULAs after a merger. Our 12-step ULA certification process analyzes all the contractual issues of a ULA to get the highest benefit in compliance and cost reduction.

For the contract basics, see what is an Oracle ULA, and for other common problems, Oracle ULA audit issues.