Five Categories of Licensing Exposure Hidden in Every Deal

After more than a thousand assessments across our team over multiple decades, the same five categories account for the overwhelming majority of what we find. The fifth one is not a liability at all. It’s money sitting on the table.

Hi again, Paul Lindberg here, president of Altaris Cloud — 17 years in Microsoft licensing and compliance, more than 600 audits personally. This is part of a six-part series on licensing risk in mergers and acquisitions. Let me get specific.

1. Windows Server in Shared Environments

Windows Server must be licensed through the service provider agreement unless the physical host hardware is dedicated to a single client. Shared hardware means the service provider carries the obligation.

This is consistently one of the largest single line items we find, and it’s almost always driven by a genuine misunderstanding rather than by intent. There’s usually an optimization story buried in there too. On one engagement, we found 19 hosts running fewer than six virtual machines each, with most running only one or two active operating system environments. That’s a company paying for data center capacity it isn’t using. The right answer was consolidation and a Standard Edition model, which lowered their ongoing cost.

2. Remote Desktop Services Subscriber Access Licenses

Every user authorized to access a hosted desktop or a hosted application needs a subscriber access license, per user, per month. That word — authorized — is where hosters get into trouble. Many of them license only concurrent connections, or only the users who actually logged in that month. Neither one is the standard. If a user has the ability to connect, they need a license, whether they use it or not.

The other failure mode is simpler. Usage grows quietly, and nobody recounts. On one due diligence engagement, remote desktop services licenses accounted for over 26,000 units of the total gap. That was the single largest quantity line in the findings.

3. SQL Server Core Licensing

Two failure modes here. First, core counts. Environments get resized, virtual machines get more cores allocated, and licensing never catches up. Second — and more expensive — edition mismatch. Enterprise Edition costs several times what Standard costs. Companies deploy Enterprise for a feature they needed once and never revisit the decision.

In one hosting inspection, SQL Server Standard and SQL Server Enterprise together made up nearly $1 million of the shortfall.

4. Office Subscriber Access Licenses

Office Standard and Office Professional are different products at different price points. And in hosted environments, both require per-user subscriber access licenses. Deployment images drift. Someone deploys Professional to everyone because it’s simpler, while the licensing reflects Standard. That gap compounds every month, across every user.

In that same inspection, Office Standard and Office Professional together contributed roughly $600,000.

5. Over-Licensing — the One Where We Find Money

And this one is different: over-licensing. This is where I want to change the tone, because compliance work is not only bad news.

On one assessment of a client’s estate, we found substantial over-licensing across Windows Server, SQL Server, and remote desktop services. We did that carefully — we excluded service accounts, excluded disabled organizational units, and cleaned up Active Directory before we counted anything. You have to do that work first, because if you don’t, you’ll overstate the savings and embarrass yourself in front of the client.

But done properly, that finding is money. It’s a negotiation position. It’s real annual savings that goes straight to the acquired company’s bottom line.

So the honest picture is this: sometimes we find a liability. Sometimes we find money sitting on the table. Frequently, we find both in the same environment. Either way, your client is better off knowing before they sign rather than after.

In the next video, I walk through a real deal where a $575,000 finding turned into $733,000 of value for the buyer. If there’s Microsoft licensing anywhere in your deal, call before you close.