Key Takeaways

  • Enterprise cloud contracts rarely split cleanly. Danielle Fortier of Cooley notes that corporate parents typically run multiple product lines under a single account across platforms like AWS or Azure.
  • Getting consent to assign cloud accounts takes months, not days. Big cloud providers move slowly, creating hard operational bottlenecks right before closing.
  • Customer contracts split easily, but shared software vendors create hidden entanglements. ERP, finance, security, and developer tools are almost always shared parent expenses.
  • Incomplete vendor diligence can explode at the finish line. Fortier recounts a deal where the operational team discovered 50 unmapped vendor contracts just days before closing.

The Cloud Hosting Bottleneck

Danielle Fortier has seen deal teams spend months negotiating intellectual property assignments and customer transitions, only to stall on infrastructure contracts nobody audited. Sellers often assume shifting operational software to a buyer is an administrative task. In practice, enterprise infrastructure resists clean division.

As Fortier puts it, “mostly on the vendor side, like they do more often tend to be shared across different lines of business and like we more often see businesses that each have sort of their own independent customer contracts or or right subscription agreements that are specific to a certain product. Whereas like on the vendor side, you know, you just have your cloud hosting account for example, and that covers covers all of your businesses.”

When a parent company operates multiple software divisions, all of them typically live under one master enterprise agreement. “Most of the time a seller has three products and it's not like one sits in AWS and one sits in Azure,” Fortier says. “It's usually just an enterprise contract. Um and so therefore it's not something we can just pick up and move.”

The Consent Lag from Tech Behemoths

The mechanical delay comes down to counterparties. Private equity buyers expect enterprise software vendors to process contract assignments with commercial urgency. Hyperscalers do not operate on private equity timelines.

“Those big cloud hosting providers, they're behemoth organizations,” Fortier says. “They're not right. They're not ones to move fast or say, 'Sure, you can just like move that contract over, right? It's it's not like you can submit a consent on Monday and get it on Tuesday.'”

Securing an assignment consent from Amazon Web Services or Microsoft Azure often requires legal reviews, credit checks, and account restructurings that stretch for weeks or months. When deal teams treat these approvals as routine closing checklists, they find themselves unable to separate core application hosting from the parent entity on the targeted closing date.

The Fifty-Vendor Scramble

The problem reaches far beyond cloud hosting. Standard corporate carve-outs rely on dozens of back-office tools: enterprise resource planning systems, billing engines, security monitoring services, and ticketing platforms. Because these services are ordinary corporate overhead, deal makers frequently overlook them during initial asset scoping.

Fortier recalls the operational friction this oversight produces: “what's sometimes less obvious, particularly in tech deals, um, is all of the sort of vendor relationships that that make that work. And a lot of those aren't particularly cool or interesting, right? like a bunch of software tools that are many of which are probably off the shelf that but they all kind of feed into making the business run.”

In one transaction Fortier worked on, diligence surfaced a massive gap right before signing. The deal team was “a couple days before closing and um you know, realized that that list was actually like off by like you know 50 vendors, right? So like a very very in incomplete um incomplete list and then you're really like scrambling.” Every omitted vendor required an emergency assessment: did the carved-out unit need a direct assignment, a new corporate license, or temporary coverage under a transition services agreement?

Why It Matters

Carve-out delays shift value directly from buyers to sellers through extended transition services agreements and bloated integration budgets. When enterprise cloud agreements and operational tools cannot transfer cleanly, buyers face delayed operational separation and stranded overhead. Software carve-outs are increasingly valued not on stand-alone code assets, but on the true cost of unbundling shared infrastructure.