Mergers, acquisitions, and divestitures create complex challenges for software asset management. Adobe licensing – especially under an Enterprise Term License Agreement (ETLA) – requires careful planning during M&A events.
Below, we provide expert guidance for CIOs on three common scenarios. Each section is standalone, offering clear explanations of Adobe’s policies, detailed checklists, risks to avoid, realistic examples, and a summary of what CIOs should do.
When Acquiring Another Company: Integrating Adobe Licenses
Adobe Licensing Policy in Acquisitions: Adobe licenses are generally tied to the legal entity that purchased them, and standard agreements prohibit transferring licenses to another organization. In an acquisition, this means that the acquired company’s Adobe licenses (whether ETLAs or subscriptions via VIP) do not automatically transfer to the acquiring enterprise.
Adobe does allow contract assignment if the acquired company is merged into the buyer. For example, an ETLA can be assigned in its entirety to a surviving entity in a merger, with Adobe’s approval and notice.
However, licenses under Adobe’s cloud subscription program (VIP) cannot be “transferred” between companies via a form – the new owner would need to consolidate those users under its agreement. Typically, Adobe is willing to consolidate contracts at the next renewal.
They may also help co-term (align) different license agreements so the combined company has a single renewal date. The key is to plan the integration with Adobe’s policies in mind to avoid compliance gaps or paying for redundant contracts.
Checklist & Best Practices for Acquiring Companies:
- Inventory both companies’ licenses: catalog the Adobe products, license counts, and contract types of the acquired company. Determine if they have an ETLA, VIP subscriptions, or perpetual licenses. Do the same for your enterprise. This forms the baseline for integration planning.
- Review Contract Terms: Examine the acquired firm’s Adobe agreements for any assignment clauses or restrictions. Confirm how long their contracts run and if early termination is allowed (typically, ETLAs run their full term). Check if their licenses are region-specific or have other use constraints.
- Engage Adobe Early: As soon as the acquisition is underway, notify your Adobe account manager or reseller. Discuss options for bringing new users into your ETLA or managing dual contracts temporarily. Adobe may advise letting the acquired contract run its term and then merging at renewal, or offer a way to co-term agreements. Early communication helps ensure you stay compliant and can negotiate any needed adjustments.
- Maintain Compliance During Transition: Decide how acquired employees will access Adobe software immediately. If you plan to move them onto your Adobe enterprise environment (e.g. Adobe Admin Console), add them to your license counts – an ETLA often allows adding users and then true-up billing later. If you keep the acquired company’s licenses separate for now, ensure those users remain under their existing entitlements until the switch. Do not let users use Adobe apps without a valid license assignment (either through the old company or your company). Mixing users into your environment without updating license counts could trigger compliance issues.
- Consolidate Admin & Identity Systems: As a best practice, merge the Adobe user management if possible. For example, migrate the acquired users into your Adobe Admin Console domain or federated ID system. This may involve inviting those users to your organization’s Adobe accounts and removing them from the old one. Plan this carefully to avoid disrupting access. Allow a period of overlap if needed (Adobe often suggests allowing some license overlap during migrations) so that users don’t lose access when switching accounts.
- Plan for Contract Co-Terms and Renewals: If you and the acquired firm have separate agreements, align their end dates whenever possible. You might negotiate a short extension or reduction so that both agreements expire at the same time. At the next renewal cycle, negotiate a single, consolidated ETLA that covers all Adobe users across the combined company. Consolidation at renewal not only simplifies management but can also increase your volume, leading to a better discount. Be prepared with updated user counts and product needs for the combined entity when it’s time to renew.
- Avoid Overlapping Spend: Time the integration to minimize paying for two sets of licenses for the same users. For example, if you move acquired staff onto your ETLA mid-term, consider not renewing their old contracts, or vice versa. You may have to maintain some overlap to ensure continuity, but keep it as short as feasible. Track when each user transitions so you can terminate the duplicate license on the other side.
- Leverage True-Ups and Adjustments: Use the ETLA’s flexibility to accommodate the acquisition. Most ETLAs allow an annual true-up – you report additional users or products added during the year and settle the cost. Add the acquired company’s licenses to your true-up report to legitimize their use under your contract. (Conversely, do not assume you can reduce commitments mid-term if the acquired licenses are no longer needed; ETLAs generally lock in a minimum commitment until renewal.)
- Consult Licensing Experts if Needed: Complex cases (e.g., when both companies have large overlapping ETLAs or unique Adobe products) may require advice from independent licensing specialists, such as Redress Compliance. They can help find cost-saving opportunities, navigate contract fine print, and avoid common traps, such as inadvertently doubling up on subscriptions.
Risks to Avoid (Acquisition Scenario):
- Compliance Gaps: A major risk is failing to properly license new employees. If acquired users start using Adobe software under your systems without being added to an agreement, your organization could be out of compliance. Adobe’s compliance team may audit after an acquisition, knowing headcount has changed – any shortfall might result in penalties or rushed purchases. Avoid this by proactively licensing every user and product in use.
- Double-Paying for Licenses: Overlapping ETLAs or contracts can result in you paying twice for the same product. For instance, if both companies have 100 Photoshop licenses for the same team after integration, you might inadvertently maintain both sets. This waste can happen if you don’t consolidate. Regularly reconcile the combined license pool and eliminate redundancies at renewal.
- Contract Misalignment: If the acquired company’s Adobe contract is ignored, it may auto-renew or linger unused. Conversely, canceling it without ensuring coverage under another contract can leave users stranded. Missing a contract notice period could also incur costs. Manage timelines diligently: explicitly end or merge contracts according to their terms.
- Ignoring License Terms: Assuming you can freely “transfer” or share licenses across entities is dangerous. Remember that unless the acquired entity is merged and the contract assigned, its licenses remain under the old legal entity. Using them outside that scope (e.g., for the parent company’s benefit) might violate Adobe’s terms. Always follow formal processes (such as assignments, new purchases, or vendor agreements) when moving licenses between entities.
- Incomplete Data and Asset Integration: M&A can be chaotic – don’t let Adobe licensing fall through the cracks. Failing to capture all of the acquired organization’s Adobe usage (for example, small teams using Adobe Creative Cloud via credit card subscriptions) is a risk. Undiscovered software usage can later surface as an unbudgeted cost. Conduct a thorough audit of creative and PDF tools in use at the acquired firm.
Example – Acquisition: Company A has an existing 3-year Adobe ETLA covering 500 employees. It acquires Company B, which has 100 Adobe Creative Cloud seats through the VIP subscription program (renewed annually in November) and some older Acrobat perpetual licenses.
Upon acquisition, Company A’s IT asset team inventories Company B’s licenses and finds overlapping products. They decide that all 100 new users will eventually be covered under Company A’s ETLA. For the first few months, Company B’s VIP account remains active to avoid disruptions.
By the next true-up of the ETLA, Company A will add those 100 users to its license count, and Adobe will bill the prorated cost. In November, Company A does not renew Company B’s separate VIP subscription, as it has already transitioned those users.
At the next ETLA renewal, Adobe will co-terminate the arrangements into a single agreement. This consolidation gives Company A a higher tier discount for 600 seats and streamlines administration. Throughout the process, Company A kept Adobe informed and ensured that no user was using Adobe software without a valid license. As a result, the Adobe licensing merger was smooth, cost-efficient, and fully compliant.
What CIOs Should Do (Acquisition):
- Include Licensing in M&A Due Diligence: Ensure your M&A integration checklist covers software assets. Assess the target company’s Adobe license contracts and usage early, and budget for any true-up or new licenses needed to cover additional users.
- Coordinate Contract Strategy with Adobe: Develop a plan with Adobe to merge or align contracts as needed. Use the renewal as an opportunity to negotiate better terms for the larger combined user base.
- Prevent Overlaps and Gaps: Assign clear responsibility to a team for turning off duplicate licenses and adding new ones. Double-check that every acquired user and Adobe product is properly accounted for under a contract – neither paid twice nor left out.
- Leverage Scale: Use the increased scale of your organization after acquisition to negotiate improved pricing or terms for Adobe products. Adobe values larger deployments, so a consolidated deal can be advantageous if handled shrewdly.
When Being Acquired: Adobe Licensing Considerations for the Acquired Company
Adobe Licensing Policy in an Acquiring Situation: If a larger company acquires your enterprise (with an existing ETLA), the situation is reversed – your licenses need to be integrated into the new ownership.
Adobe’s contracts typically allow an ETLA to be assigned to the acquiring company as part of the merger or acquisition, meaning the new parent can take over your contract. This is usually done with written notice to Adobe, and as long as the assignment doesn’t expand license scope beyond what was originally agreed upon. In practice, if the acquiring company also has an Adobe ETLA (or other agreements), they will have to decide whether to run both contracts separately until they expire or to consolidate sooner.
Adobe often supports co-terming agreements in acquisitions, for example, by adjusting one contract’s end date to allow for a unified renewal. Keep in mind that until consolidation happens, the two companies remain individually responsible for compliance under their respective contracts.
From the perspective of the acquired company’s CIO, it’s crucial to transfer licensing knowledge to the new owner and ensure continuity for end-users.
Checklist & Best Practices for Companies Being Acquired:
- Document Your Adobe License Position: Before the acquisition closes, prepare a complete record of your Adobe licensing. Include products in use, number of licenses, contract IDs, term dates, costs, and any special provisions in your ETLA. This is valuable information to share with the acquiring organization’s IT and procurement teams. It ensures the new owners understand what you have in place and any obligations (e.g., you have 9 months left on a 3-year ETLA with a certain annual fee).
- Learn the Acquirer’s Licensing Landscape: Seek information on whether the acquiring company has its own Adobe enterprise agreements. If they do, note the type (e.g., ETLA, VIP), what it covers, and when it renews. This will influence the strategy: for instance, if their ETLA renews next year and yours the year after, they might keep yours separate for a year, then merge at their renewal, or vice versa. If the acquirer does not have a large Adobe agreement, they may choose to adopt yours or negotiate a new one for the combined entity.
- Ensure Legal Assignment or Transition: Work with legal teams to execute any needed assignment of contracts. Adobe’s ETLA contract language usually permits assignment to the surviving entity in an acquisition, but you must notify Adobe in writing. Ensure that this notice is sent so that Adobe recognizes the new company as the valid licensee in the future. If your company is fully acquired, the contract may be assigned to the parent company’s name; if you remain a subsidiary, the contract may stay in your name but under new ownership. Clarify this to avoid any later dispute about who is entitled to use the licenses.
- Align License Administration: Coordinate with the acquirer’s IT administrators to determine how to manage user accounts. For example, if the acquiring company plans to integrate your user directory (AD/SSO) with their Adobe Admin Console, plan a schedule to migrate users. There may be domain changes (such as user emails being redirected to the new company’s domain) that affect Adobe logins. Test that your users can continue to access Adobe Creative Cloud or Document Cloud under the new credentials if changes occur. During any interim period, ensure your Admin Console remains active so users have uninterrupted access.
- Decide on Interim License Management: In the short term, the safest approach may be to continue using your existing licenses to support your users until a consolidation plan is executed. This might mean the acquiring company lets your ETLA run its course. Alternatively, if the acquirer’s Adobe agreement has room to absorb your users immediately, they might prefer to move everyone over quickly. Discuss these approaches: continuing separate contracts temporarily vs. immediately merging. Each has pros/cons (separate = no contract changes mid-term but two admin environments; immediate merge = one environment but possibly financial or contractual adjustments needed). Align the approach with business timelines – for example, if a new quarter or project is starting, minimize disruption by timing the switch after critical deliverables have been met.
- Monitor for Overlap or Underuse: If both your organization and the acquirer have Adobe licenses covering the same product, you may find that some employees have access through both contracts. For example, a design team in your company and the acquirer’s company both had Creative Cloud licenses before the merger; after the IT systems are combined, they might accidentally be assigned two licenses. Similarly, there may be opportunities to eliminate redundant licenses. For example, if 50 of your users also have accounts in the acquirer’s system, you can drop one set. Conduct a post-merger license audit to reconcile who has what. Remove duplicate user assignments and reclaim those licenses to prevent unnecessary costs.
- Reconcile Different License Terms: Be mindful of any differences in contract terms. Your ETLA might cover certain Adobe products or usage rights that the acquirer’s contract does not (or vice versa). For instance, you might have had an all-app Creative Cloud bundle for all users, whereas the acquirer only licenses single-app subscriptions for specific teams. In a merge, some users may lose or gain access if not planned. Adjust the combined licensing model to ensure that everyone continues to have the tools they need. For example, the new company may upgrade some of its users to all-app or downgrade some of yours if not needed, aligning with a consistent policy. This should be done at renewal time to optimize costs under one agreement.
- Budget for Contract Changes: If the plan is to consolidate into a single contract (likely the acquirer’s), consider the financial implications. Your organization might have already paid upfront for the ETLA period. The acquirer will want to factor any remaining value or cost into the deal economics. They may negotiate with Adobe to fold that value into a new deal. Be prepared to help with true-up reports or usage data to support those negotiations. Also, if termination of your contract is discussed, be aware of any early termination penalties (though generally ETLAs don’t allow early cancellation without cause). It might be more cost-effective to let it expire naturally.
- Stay Audit-Ready: M&A events often put a spotlight on license compliance. The combined company could be at risk of an Adobe audit or a “friendly license review.” To mitigate this, keep records of all changes in license allocations during the transition. If questioned, you should be able to demonstrate that when new users were added or when contracts were merged, everything was properly licensed and no unlicensed use occurred. Showing a clear paper trail of assignments and usage will satisfy compliance inquiries.
Risks to Avoid (Being Acquired Scenario):
- Redundant Contracts Persisting: A frequent pitfall is failing to sunset one of the Adobe contracts promptly. If your company’s ETLA and the acquirer’s ETLA both continue separately for years, you miss out on volume discounts and create administrative overhead. Worse, you might pay for more licenses than needed. Avoid this by planning a contract consolidation — running dual agreements should be a short-term solution, not a permanent state.
- Premature Contract Cancellation: Conversely, be cautious that the acquirer doesn’t assume they can just cancel your agreement immediately. ETLAs have commitments; if the new owner stops abiding by your contract (e.g., failing to pay an installment or attempting to terminate early) without Adobe’s consent, it could lead to penalties or a breach. Always follow the contract terms. Usually, the safest approach is to honor the existing contract until an official merger or assignment is completed.
- License Undercoverage Post-Merge: If the acquiring company decides to move everyone onto their licenses, ensure their agreement has capacity and rights for all your users. For instance, if your ETLA covered 500 Photoshop users and they only have 300 under contract, they must true up or amend their agreement to add those extra 200, effective immediately when you migrate. If they don’t, those 200 users might be using software without a valid license – a compliance exposure. Double-check headcounts and product coverages when combining.
- Loss of Special Terms: Your ETLA may include negotiated perks, such as training credits, extra software modules, or grandfathered pricing. In the rush of integration, these benefits can be lost if they are not carried over. The acquirer might not be aware of them, and they could vanish when contracts merge. To avoid this, highlight any valuable terms from your contract. During consolidation negotiations with Adobe, strive to retain equivalent benefits in the new agreement.
- Data and Asset Migration Issues: Although not a licensing compliance issue per se, consider that your users may have cloud-stored assets (Adobe Creative Cloud files, libraries, etc.) tied to your organization’s Adobe identity. When moving to the acquirer’s Adobe setup, if accounts change, those assets need to be migrated or shared appropriately. If mishandled, users might create new accounts and repurchase stock assets or subscriptions they already have, causing unnecessary spending. Plan for a smooth migration of user data and assets to prevent duplicate licensing of content or services.
Example – Being Acquired: Company X, a midsize firm with an Adobe ETLA for its 300 employees, is acquired by Company Y, a larger enterprise with its own Adobe licensing. Company Y has an ETLA covering 2,000 users that renews in 18 months. Company X’s ETLA has 12 months remaining. The CIO of Company X works with Company Y’s software asset management team to integrate license planning. They decide to keep Company X’s ETLA active for the remaining 12 months (assigned under Company Y’s name) to avoid any termination fees. Still, they immediately migrate Company X’s users into Company Y’s Adobe Admin Console for better management. During this overlap year, Company X’s Adobe contract is managed by Company Y but kept separate financially. At renewal time, Adobe combines the two ETLAs into a single new 3-year agreement for Company Y, co-terminating on the schedule of the larger contract. Because of the increased number of users (2,300 total), Company Y negotiates a more favorable per-user rate. Throughout the transition, all users had continuous access. By planning, Company Y avoided compliance issues (every user was always accounted for under one of the contracts) and eliminated duplication (no user counted twice). After consolidation, they streamlined to a single Adobe bill and a single set of terms.
What CIOs Should Do (Being Acquired):
- Transfer Knowledge to the New Owners: Proactively inform the acquiring company about your Adobe license agreements and usage. Don’t assume they know your environment – provide them with your licensing playbook so nothing is overlooked.
- Collaborate on a Licensing Integration Plan: Work hand-in-hand with the acquirer’s team to decide how and when to merge Adobe contracts. Advocate for a plan that maintains coverage for your users and leverages the combined scale at renewal.
- Ensure No User is Left Behind: Watch out for any licensing gaps during the switchover. It’s your responsibility to flag if certain teams or tools might fall out of compliance. Confirm that the new integrated license pool adequately covers all software use from Day 1 of the merged companies.
- Preserve Value in Negotiations: Make sure the investments your company made in Adobe licensing (prepaid fees, discounts, or special add-ons) are not lost. Work with the acquirer to present a united front to Adobe, carrying over or crediting these benefits into the new agreement to maximize the value for the combined entity.
When Divesting a Business Unit: Separating Adobe Licensing
Adobe Licensing Policy in Divestitures: Divesting a division or spinning off a business unit poses a different challenge – part of your organization will become a new, independent entity.
Adobe’s standard policy is that licenses are non-transferable to a new company unless specified in a contract assignment. In a partial divestiture (unlike a whole-company acquisition), you typically cannot transfer a subset of your Adobe licenses to another organization.
The departing business unit will need to obtain its own Adobe licenses under the new ownership. For example, if your company has an ETLA covering 1,000 users and you spin off 200 users into a new company, those 200 users can no longer legally use the parent’s ETLA licenses once the separation is complete.
There is no out-of-the-box mechanism to “split” an ETLA. Adobe expects the new entity to sign its agreement or purchase new subscriptions for its users. That said, companies often arrange a transition period: the parent might continue to provide Adobe software access to the divested users for a short time (via a Transitional Service Agreement), but this requires careful handling to stay compliant. Ultimately, both organizations must ensure they are appropriately licensed post-divestiture.
The parent should reduce its license counts at renewal to avoid overpaying, and the new entity must start licensing for itself.
Checklist & Best Practices for Divesting a Unit:
- Identify Affected Users and Products: Determine exactly which users, teams, and Adobe products are in scope of the divestiture. List the employees who will move to the new company and what Adobe software they use (e.g., Creative Cloud apps, Acrobat Pro, Adobe Experience Cloud products, etc.). This list will guide what licenses need to be transitioned.
- Review Your Adobe Contract for Exit Clauses: Check if your ETLA or other Adobe agreements have any clauses related to divestiture or downsizing. Most standard ETLAs don’t allow you to reduce your commitment mid-term, but some large enterprises negotiate special provisions for business changes. For instance, see if there is any “partial termination” right or an assignment clause that could apply to a spun-off entity. If none exist, plan to fulfill your contract as is until renewal (meaning you’ll still pay for those seats even if the users leave mid-term). Knowing your contractual flexibility will inform negotiations with both Adobe and the buyer.
- Coordinate with the New Entity’s IT Team: Engage with whoever will manage IT for the divested unit (or the buyer’s team, if the unit is sold). They will need to arrange new Adobe licenses for their users. Share the list of Adobe users and products so the new team can evaluate what licenses to procure. The new entity might decide to sign a fresh ETLA (if they have enough users to justify it) or simply use Adobe’s VIP subscription program for a smaller user base. This coordination ensures that the new company is ready to take on licensing responsibility.
- Discuss a Transition Plan with Adobe: To avoid a “cliff” where users lose access on day one of separation, discuss transition options with Adobe. Often, the parent company can continue to cover the divested users for a brief period under its contract if Adobe is informed and agrees. This is usually handled via a formal agreement or at least a written acknowledgment. For example, you might agree that for 3 months post-close, the 200 users will still use the parent’s licenses while the new company sets up its environment. Adobe might require that those users still count against your license totals during that time (meaning you can’t reduce yet). Ensure the timeframe is finite and well-documented.
- Establish a Clear Cut-Off Date: Set a firm date when the new entity’s licensing takes over completely. By this date, all divested users should be removed from the parent’s Adobe Admin Console and transitioned to the new company’s Adobe systems. This cut-off might align with the expiration of a transitional service period. Communicate this date to all stakeholders (internal IT, the new company, and Adobe). Having a hard deadline prevents the transition from dragging on and risking indefinite non-compliance.
- Support the New Entity’s License Setup: Assist the divested unit in a smooth start on its own. This could include exporting user lists or usage data to help them configure their new Adobe Admin Console. If they opt for a new ETLA, your organization may want to introduce them to the Adobe account team. While it’s ultimately their responsibility, collaboration ensures no user is left without access. It also builds goodwill, especially if the divestiture is amicable or the companies will partner.
- Decommission or Reallocate Licenses at Separation: On (or just before) the separation date, remove departing users from any groups or license assignments in your Adobe Admin Console. Essentially, you’ll free up those licenses. However, because you likely can’t reduce your ETLA count immediately, decide what to do with the freed licenses for the remainder of the term. Best practice: reallocate them within your company if you have other unmet needs, such as users waiting for access or new hires coming in If you truly have no use, then they will sit idle, but at least ensure they are not accidentally still being used by people no longer with you. Document that these licenses are now spare due to the divestiture.
- Adjust License Counts at Renewal: When your ETLA or subscription comes up for renewal, update your required quantities to reflect the smaller organization. This is your opportunity to right-size your Adobe agreement. Provide Adobe with the new, lower user count (minus the 200 users in our example) and negotiate pricing accordingly. Be aware that if your volume drops significantly, Adobe’s discount tier might change – per-user costs could rise. Try to negotiate to mitigate any unit price increase resulting from the reduced scale. If the divested unit were large, Adobe would lose some business, so they might be amenable to friendly terms to keep the parent company satisfied and avoid further losses.
- Monitor for Compliance After the Split: Even after the divestiture, keep an eye on any lingering access. Sometimes, a divested user may still have an old account active, or someone in your company may continue to use a license intended for the divested team’s product. Run an internal audit a few weeks after the split to confirm that only active company employees are assigned Adobe licenses. Also, ensure that the new company has indeed set up their licensing – if not, their users could unknowingly continue to log in under your organization (especially if single sign-on was previously shared). Work with them to remediate any such issues quickly.
- Record the Change for Audit Trail: Keep documentation of the divestiture’s impact on software licensing. Note the date of separation, how many licenses were shed, and the communications with Adobe regarding the transition. This record is useful if Adobe later questions why your user count suddenly dropped, so you can show that it was due to an organizational change, not an attempt to circumvent licensing. It also serves as evidence that you took proper steps to remain compliant throughout the transition.
Risks to Avoid (Divestiture Scenario):
- Unlicensed New Entity: The worst-case scenario is the spun-off business operating without Adobe licenses in place. Suppose the transition isn’t handled on the first day. In that case, the new company’s employees might continue using Adobe software under the impression they are licensed, when in fact they no longer have a valid license (since they left the parent’s coverage). This creates legal exposure for both parties. Avoid this by ensuring that the new entity arranges its agreement or formally extends coverage from the parent for a limited time. Never assume the new owners will “take care of it” – follow up to confirm.
- Parent Company Overpaying: If you don’t adjust your licensing after a divestiture, you’ll be left paying for licenses you don’t need. For example, if you had an ETLA for 1,000 users and now have 800 users, you will still pay for 1,000 until renewal, unless you negotiated flexibility. This is wasted budget. While mid-term reductions are usually not possible, failing to reduce at the next opportunity means ongoing overspend. Plan to renegotiate at renewal; if you skip this, Adobe won’t likely lower your bill on its own.
- Contractual Breach via Continued Use: If the parent continues to allow the divested users to use its licenses beyond a short transition, it could breach contract terms. Remember, your Adobe agreement likely limits use to your employees or contractors. After divestiture, those people are neither – they belong to another company. Extending their use of your licenses indefinitely is effectively providing Adobe software to a third party without Adobe’s permission. This is a serious compliance no-no and could result in Adobe terminating your agreement or pursuing penalties. Always formalize any extended use with Adobe to stay compliant with the license terms.
- Data Loss or Access Disruption: If the separation of Adobe environments is not smooth, users could lose access to critical cloud-stored documents or libraries. While this is more an operational risk than a licensing risk, it can lead to productivity losses and frantic attempts to regain access, sometimes resulting in ad-hoc license purchases out of panic. Mitigate this by coordinating IT cutovers – for instance, ensure the new company’s Adobe admins have invited users and migrated content before their old accounts are deactivated. This way, users seamlessly switch to the new login with minimal downtime.
- Audit and Negotiation Surprises: Vendors like Adobe may closely watch divestiture news. A sudden drop in your license usage might prompt questions or even an audit to ensure you’re not using more licenses than you paid for post-split. Also, when you go to reduce licenses at renewal, Adobe might push back if it is not convinced that those licenses are truly unused. Having documentation of the divestiture and transition allows you to justify the reduction. The risk here is low if you’ve done everything correctly, but be prepared to explain the change to Adobe’s reps or compliance team. Additionally, if the divested unit was a big consumer of Adobe products (like a graphics department), their departure could reduce Adobe’s footprint in your company – expect Adobe’s sales team to possibly approach the new company as a fresh customer, and also ensure the parent doesn’t intend to drop more products. In other words, a divestiture might trigger renegotiation dynamics; be ready to handle Adobe’s inquiries on both sides.
Example – Divestiture: TechCorp is an enterprise with a 3-year Adobe ETLA covering all 5,000 employees, including 500 users in its Design and Marketing division. TechCorp decides to spin off the Design & Marketing division into a new independent company, CreativeSpinCo. TechCorp’s CIO and SAM team coordinate with CreativeSpinCo’s new IT lead well in advance.
They find that out of those 500 users, 400 use Creative Cloud All-Apps and 100 use only Acrobat Pro. CreativeSpinCo plans to enroll in Adobe’s VIP program to get 400 Creative Cloud licenses and 100 Acrobat licenses for its staff under its name. The two companies agree on a 4-month transition service period where TechCorp will keep those 500 users on its ETLA so there’s no immediate cut-off.
They inform Adobe of this plan, and Adobe consents, with the understanding that by the end of 4 months, all 500 users will be off TechCorp’s license. During the transition, CreativeSpinCo sets up its Adobe Admin Console, purchases the licenses, and gradually has its employees sign in under the new environment.
At the 4-month mark, TechCorp’s admins remove all 500 divested users from its Adobe console. At the next ETLA anniversary, TechCorp reduces its license count by 500, lowering its annual Adobe spend. CreativeSpinCo operates independently with its licenses. This careful approach allowed the division to spin off without any user losing access or any licensing violations.
What CIOs Should Do (Divestiture):
- Plan the License Handoff Early: Integrate software licensing into the divestiture project plan from the start. Ensure the departing unit has a clear path to obtain its own Adobe licenses and set a firm timeline for the handover.
- Use Transition Agreements Wisely: If a transitional period of shared licensing is needed, formalize it to ensure a smooth transition. Get Adobe’s acknowledgement and have an internal agreement with the new entity on how long they can rely on your licenses. Treat this like a short-term loan with a specific end date.
- Right-Size and Renegotiate: Don’t forget to adjust your Adobe contract after the divestiture. Come renewal time, work with Adobe to scale down your commitments and costs to match your new, smaller organization. Use the divestiture as a negotiation point to possibly improve terms on the remaining scope.
- Validate Compliance Post-Separation: After the split, double-check that only your staff are using your Adobe subscriptions, and that the new company has taken over responsibility for their users. Conduct a compliance review to ensure no inadvertent sharing persists. A clean break in licensing will protect both parties and set the stage for each to manage their Adobe environments independently and efficiently.
