If your company is planning to purchase another company’s assets, it would pay to do your due diligence. Most companies are aware of the many hoops they must jump through in order to acquire another company or at the very least will consult an attorney about how to do so. However, there is one step that is frequently overlooked during this process: software compliance and the proper transfer of software licenses.

During my tenure at SIIA, I have audited hundreds of companies that have all made the same unfortunate mistake. They did not establish whether the seller’s company was software compliant or obtain proper transfer of their software licenses during a merger or acquisition. It is unfortunate because the purchaser finds themselves using unlicensed software and potentially facing fines and costly litigation.

I recommend performing a detailed software inventory during the early phases of due diligence. The inventory can be performed using one of the many software audit tools available or can be accomplished through a manual audit of each workstation, server and peripheral the company owns. Once the inventory has been completed, the purchaser should review all of the company’s software licenses and/or purchase documentation to support those licenses. Any licensing deficiencies should be addressed. The company may even discover that they are over licensed during this process and find cost saving opportunities.