When your organization is going through a merger or acquisition, your first priorities might include aligning operations, consolidating systems, or unlocking synergies. But there’s a less visible—yet financially critical—area that demands your attention: Oracle licensing.
Whether you’re acquiring another business or being acquired, Oracle treats M&A as a licensing event—and if you’re not prepared, it could trigger significant unplanned costs, audits, or compliance liabilities.
Here’s what every Oracle customer should know when heading into an M&A.
Oracle Sees M&A as a Licensing Event
Oracle’s licensing agreements, including its Transactional Oracle Master Agreement (TOMA) and product-specific ordering documents, generally prohibit the automatic transfer of licenses between legal entities without prior written approval. That means:
- You can’t assume your Oracle licenses move with the business.
- Oracle may use this as a moment to audit, review, or renegotiate your agreements.
M&A activity is a bright red flag for Oracle’s compliance teams. Whether intentional or not, Oracle assumes your use of its software will change—often in ways that breach licensing terms unless addressed upfront.
License Transfers Are Not Automatic
Here’s the fine print that trips up many organizations: Oracle licenses are not assignable by default.
If the acquiring company wants to use Oracle software owned by the acquired company—or vice versa—it typically needs Oracle’s consent. Failure to obtain that consent could result in:
- Compliance violations
- Retroactive licensing fees
- Unbudgeted support costs
- Potential audit penalties
Even if both companies already use Oracle products, combining environments post-merger could lead to unlicensed usage, especially with processor-based or user-based licensing.
Watch Out for Unintentional Overuse
After an M&A, it’s common to consolidate systems, migrate workloads, or expand user access. All of these can accidentally push you out of compliance. Common red flags include:
- Exceeding processor or Named User Plus (NUP) limits
- Extending usage into unlicensed geographies or subsidiaries
- Deploying software in virtualized environments not allowed under Oracle’s strict virtualization policies
Oracle’s licensing rules—especially around VMware and Java SE—are complex and unforgiving. Without a compliance strategy, even well-intentioned integration efforts can result in six- or seven-figure exposure.
Prepare for a Surprise Audit
Oracle has a well-documented track record of initiating audits shortly after M&A events.
Why? Because:
- There’s a higher likelihood of license misuse during business transitions.
- It presents an opportunity to up-sell new Unlimited License Agreements (ULAs) or push Oracle Cloud adoption.
- Oracle knows that legal and procurement teams are often distracted during M&A.
Translation: M&A is when Oracle knocks.
Mitigation Strategies: What You Can Do
1. Conduct Pre-M&A Oracle Due Diligence
Before any deal closes, inventory both parties’ Oracle environments:
- What licenses are held?
- What are the usage metrics (e.g., processor cores, named users, employees)?
- Are there any ULAs, support agreements, or cloud contracts in place?
- Are Java SE subscriptions involved—and how are they counted?
Use tools or work with firms like Palisade Compliance to get a clean, accurate picture.
2. Review Transfer Rights and Contracts
Check your TOMA, license definitions, and ordering documents. Most Oracle agreements will clearly restrict transfer rights. You may need:
- Oracle’s written consent
- A novation or assignment amendment
- Renegotiation of pricing or terms
3. Don’t Just Talk to Sales
Avoid informal calls with Oracle sales about the merger. Anything you disclose can—and often will—be used to initiate an audit or price negotiation. Engage procurement, legal, and compliance experts early.
4. Turn Risk into Leverage
If you do need to renegotiate or re-license, this is your moment:
- Consolidate support contracts
- Exit outdated ULAs
- Push for Oracle Cloud discounts
- Reassess Java licensing and consider third-party Java vendors like Azul or Red Hat
CIOs, Legal Teams, and Procurement: A Quick Checklist
| Key Area | Action Step |
| License Assignment | Review contracts; request Oracle consent |
| Oracle Compliance | Perform internal audit pre-M&A |
| Audit Preparedness | Document deployments, metrics, and rights |
| Java SE Subscriptions | Evaluate by employee metrics and deployment |
| License Optimization | Use leverage to renegotiate or consolidate |
Oracle licensing is already complex. Add a merger or acquisition to the mix, and it becomes a legal, financial, and operational minefield. But with the right strategy, you can turn this potential liability into a licensing optimization opportunity.
Take Control Before Oracle Takes the Lead
Mergers and acquisitions are stressful enough without Oracle turning them into high-stakes licensing events. Whether you’re acquiring a company, being acquired, or simply merging business units, Oracle will use the opportunity to audit, renegotiate, and push costly new agreements—unless you’re prepared.
At Palisade Compliance, we help organizations like yours stay a step ahead. Our team of former Oracle insiders works exclusively for Oracle customers—never Oracle—so you get unbiased, expert advice to:
- Uncover hidden licensing risks
- Avoid audit exposure
- Navigate license transfers and contract restrictions
- Leverage your M&A event to optimize Oracle costs, not increase them
Let’s talk before Oracle knocks.
Book a confidential consultation today and we’ll help you build a proactive, defensible Oracle licensing strategy tailored to your merger or acquisition:
Book time with Ed Heyburn: Initial Consultation – Oracle Licensing & Support (15 Minutes) Business Leader Needs to Know