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If the out of business scenario includes the possibility of acquisition or asset sale, code escrow is a significant factor lessening the value of assets or kill
by wgj 9y ago
If the out of business scenario includes the possibility of acquisition or asset sale, code escrow is a significant factor lessening the value of assets or killing the deal entirely. Stated differently, it's not what a buyer wants to find in due diligence.
The $50+bn company might even be the potential buyer, but under code escrow they just get it for free (less whatever was negotiated up front.)
- notyourday 9y agoRubbish. Structure it as 1 year, 2 year, 10 year whatever the hell deal you want. If you are a $50BN company ( you aren't ) you simply fire that customer.
- theobon 9y agoTypically these are worded as part of support & maintenance and is triggered by failure to meet that obligation. Acquisition, merger, spin-out, JV or bankruptcy would not trigger it provided support is maintained. Also, the force majeure clause typically allows some reasonable timeline to reinstate support before it is triggered. I would think the positive of a large client greatly outweighs the liability of the code escrow.