Technology and SaaS licences
SaaS and software licences are typically personal to the customer entity - non-assignable and non-transferable. In an asset deal that acquires a SaaS customer, the licence does not automatically transfer because the anti-assignment clause is triggered; in a share deal, the licence stays with the same entity, but a change of control clause may give the vendor a termination right. Competitor-termination clauses (the vendor can terminate if the customer is acquired by a competitor) are increasingly standard.
So in any acquisition, map every material SaaS contract for change of control and competitor triggers - each becomes a required consent for completion. A licence the buyer assumed it was getting may evaporate on the deal it was bought for.
Open source: obligations follow the code
Open-source licences behave differently from proprietary ones. Permissive licences (such as MIT or Apache 2.0) are broadly assignable, but copyleft licences (such as the GPL) attach to the software itself rather than to a party - the obligations follow the code regardless of assignment or change of control. Assigning the proprietary licence does not release the open-source obligations for embedded components.
So due diligence must look beneath the proprietary licences to the open-source components inside the deliverables - a change of control does not switch off copyleft obligations.
The M&A cascade
In an acquisition, a change of control of the target can trigger change of control clauses in dozens of the target's downstream contracts - suppliers, customers, joint-venture partners, and lenders. Mapping this cascade is the most time-consuming part of acquisition due diligence. Leveraged-finance facilities almost always treat a change of control as a mandatory prepayment event, so a missed lender consent can accelerate the target's entire debt stack.
The cascade is why deal structuring (share versus asset deal), the consent strategy, and the timetable all turn on a careful contract-by-contract review of assignment and change of control triggers.
Warranty claims and W&I insurance
Transferring share-purchase-agreement warranty claims needs care: warranties are usually personal to the original buyer, and most SPAs restrict assignment. Where warranty and indemnity (W&I) insurance is in place, buy-side policies can generally be assigned within the insured's corporate group without insurer consent, but assignment to a third-party acquirer needs consent; lenders often take security over the policy by assignment, requiring notice to the insurer to convert an equitable assignment into a legal one under s.136.
A practical point for sellers: insist that the buyer's W&I insurer waives subrogation against the seller (except for fraud). Otherwise the insurer can pay the buyer's claim and then pursue the seller directly, defeating the clean-exit purpose of the insurance.
Pharma and regulated transfers
In regulated sectors, the contractual transfer and the regulatory transfer are separate, parallel processes. A pharmaceutical transfer involves both assigning or novating the contract and a formal marketing-authorisation transfer to the regulator (the MHRA or EMA) - and regulatory status does not follow contractual assignment automatically. A change of control of the parent of a marketing-authorisation holder does not by itself require a change of the authorisation unless the holder entity itself changes.
The broader lesson applies beyond pharma: in regulated industries, completing the contractual transfer does not complete the regulatory one. Run the two on parallel timelines, and do not assume the regulatory permission moves with the contract.
Use at the desk
Practical checklist
- Map every SaaS and software licence for change of control and competitor-termination triggers as required consents.
- Look beneath proprietary licences to copyleft open-source components - their obligations follow the code (GPL).
- Map the M&A cascade - downstream change-of-control clauses, especially leveraged-finance prepayment events.
- Handle SPA warranty assignment and W&I policy assignment carefully (notice to the insurer for a legal assignment under s.136).
- For sellers, insist the W&I insurer waives subrogation against the seller (except fraud).
- Run regulatory transfers (e.g. pharma marketing authorisations) on a parallel timeline - they do not follow the contract.
This guide is informational only and is not legal advice. It does not replace advice from licensed counsel on the facts of a specific transaction.
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