WHAT A BUYER NEEDS TO KNOW
There are three key factors that contribute to the high failure rate of source code escrow arrangements.
Lack of verification and maintenance of the escrow deposit
With a statistic that 90% or more source code escrow deposits fail it is little wonder that you will encounter mixed responses when suggesting an escrow agreement. This is totally understandable. But what if source code escrow actually worked? Several years ago APPS Global saw an opportunity to change the implementation of source code escrow by creating a new generation of techniques and services to deliver high quality escrows that work. Talk to us and don’t be talked out of doing escrow if you believe your business is at risk.
Lack of commercial due-diligence in the drafting of escrow agreements
Most attention is paid to the triggering or release events of the source code in the majority of escrow agreements. While that is a key area there are other commercial considerations such as what happens if the vendor is purchased by another company? How is assignment handled? Should the vendor grant you a source code license agreement under the escrow contract? How will you ensure that the escrow agreement is enforceable? What if there is a share based buy out of the vendor? Do you have any obligations to your professional indemnity insurer to cover specific risks? These and many other legal areas can be difficult to navigate and not all may apply to you, however most escrow agreements do not cover them.
Lack of contracts or vendor management
Once a license sale is made everyone turns their attention to the implementation of the software product. Without an effective contracts or vendor management process the escrow requirements may never be followed up. This happens in a surprising number of cases and often the vendor never sends a line of code to the escrow agent. APPS Global can manage this process for your complete escrow portfolio.