What happens to source code escrow agreements when a SaaS company is sold?

Some SaaS customers, often larger or regulated ones, ask the vendor to deposit its source code with a neutral escrow agent. If the vendor fails or stops supporting the product, the customer can ask for a copy. A company you are buying may have several of these arrangements, sometimes signed years ago and half forgotten. They are easy to miss and awkward to inherit unprepared.

Finding the agreements

Ask the seller for a list of every escrow arrangement, including who the agent is, who the beneficiary customers are, and when each deposit was last updated. Then check the list against the customer contracts, because an escrow promise often sits in an enterprise agreement rather than a separate document. Ask the agent to confirm what it holds, since the seller’s memory may differ.

Release triggers a sale might touch

Read what lets a beneficiary call for the code. Typical triggers include insolvency, ending support, or failing to fix serious defects. Some contracts also mention a change of control or a sale to a competitor. If the wording is loose, a customer might argue that your purchase is a trigger. Your lawyer can tell you how each clause reads and whether the customer’s consent is needed.

After closing

The deposit must match the live product. Plan who will prepare new deposits, who pays the agent, and how the agent is told of the new owner’s name and contacts. If the buyer moves hosting or rebuilds parts of the product, the deposit and its build instructions need to follow. Add this to the handover list from the first day.

For the wider question of who holds the rights in the code itself, see who owns the code in a small software company purchase and the privacy side in customer data when a tech company is sold.