How a $575,000 Finding Became $733,000 in Value
Same environment, same findings, same dollar figure. Discovered before close, it was worth 33,000 to the buyer. Discovered after close, it would have cost them 51,000. That’s a massive swing in the financials. Let me show you exactly how that works.
Hey there, I’m Paul Lindberg, 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.
The Deal
An ERP provider was acquiring a dealer management system company. We were brought in before close. We reconciled the environment and found gaps across five product lines:
- 480 SQL Server Enterprise two-core packs
- 527 SQL Server Standard two-core packs
- 1,584 Windows Server Data Center two-core packs
- 3,941 Office Professional Plus subscriber access licenses
- Over 26,000 remote desktop services subscriber access licenses
In all, 75,000 in license liability. Now watch what happens to that same number on two different timelines.
Timeline One: Nobody Checks
The deal closes, and an audit follows. License liability: 75,317. Add the 25% contractual charge: 43,829. Add the third-party auditor fee, estimated at around 2,000. Total exposure: 51,000.
All of it lands on the buyer after close, with no recourse and no counterparty left to negotiate with.
Timeline Two: Found Before Close
Altaris is brought in, and we find it before close. The gap becomes a negotiating instrument. The purchase price was reduced by approximately the full amount of the liability. The penalty and the auditor fees never happen, because there’s no audit — those avoided costs alone were 75,000. Our fee for the engagement was 8,000. Total value delivered: 33,000.
The only difference between those two outcomes was when the findings came to light.
Four Ways to Use the Number
Once you have a number, you have four ways to use it, and this is where good deal counsel earns their fee.
- Reduce the purchase price by the exposure. Cleanest option when the number is well supported.
- Escrow a portion of proceeds against the specific licensing exposure, with a release schedule tied to remediation.
- Draft a specific indemnity for licensing with a survival period long enough to actually matter. Not the standard 12 months. Long enough to cover a realistic audit window.
- Require the seller to remediate before close as a condition of closing.
And Here’s the Part Sellers Miss
This is not a one-sided tool. A seller who gets ahead of this brings a clean, verified asset to market. They avoid a mid-diligence surprise that stalls the process. They avoid a re-trade three weeks before signing.
A seller who can hand a buyer a completed licensing reconciliation is negotiating from a position of strength, not defending one. Both sides do better when the number is known early. That’s the whole argument.
In the final video of this series, I walk through exactly what an assessment involves and how quickly it can be done. If there’s Microsoft licensing anywhere in your deal, call before you close — as early as there’s an LOI.
The Gap, Product by Product
Altaris reconciled deployed software against purchased entitlements across the target's entire environment using the same tools and methodology Microsoft uses in a formal audit. The gaps were significant — and spread across five product categories:
| Product | Unlicensed units |
|---|---|
| SQL Server Enterprise 2-Core Packs | 480 |
| Windows Remote Desktop Services SALs | 26,265 |
| SQL Server Standard 2-Core Packs | 527 |
| Office Professional Plus SALs | 3,941 |
| Windows Server Datacenter 2-Core Packs | 1,584 |
| Total unlicensed units | 32,797 |
The Takeaway
The target wasn't hiding anything. Their IT team believed they were compliant. But the gap between what was deployed and what was licensed — 32,797 units across five product categories — was invisible to standard due diligence.
Altaris fee: 8,000. Value delivered: 33,146. That's a 40x return.
A pre-close licensing assessment doesn't just protect the deal. It improves it.
Related Case Studies
62% Under-Reporting Exposed: .7M in Total SPLA Licensing Exposure — A managed hosting provider was reporting barely a third of its actual Microsoft licensing obligation.
Post-Close Licensing Assessment Finds 838+ Excess Licenses — Sometimes the finding is money sitting on the table, not risk.
If your deal involves Microsoft licensing, talk to us before close. Contact us or reach us directly at [email protected].
