M&A: integration and carve-out

How AWS, Azure, and Google Cloud commitments move in an acquisition, an integration, or a carve-out.

CategoryMedian SynergyTop QuartileDriver
Microsoft12-22%26-36%EA volume tier escalation and license rationalization
Oracle10-18%22-32%ULA consolidation and entitlement rationalization
SAP8-16%20-28%Document tier consolidation and digital access
Salesforce14-24%30-42%ELA consolidation and cloud SKU rationalization
ServiceNow12-22%26-36%Tiered pack consolidation
Workday10-18%22-30%Subscription unit consolidation
AWS16-26%32-44%EDP commitment consolidation
Google Cloud14-24%28-40%CUD consolidation
Observability and security tooling22-38%38-54%Application consolidation
Collaboration and productivity20-34%36-48%Application consolidation

AWS EDP and Google Cloud CUD consolidation produces some of the strongest synergy on the panel. AWS EDP allows the acquirer to absorb the target's spend into the EDP commitment, immediately accessing the EDP discount tier on the target's usage. Median synergy 16 to 26 percent. Google Cloud CUDs work similarly with the added benefit of CUD overlap windows. See the AWS pricing profile and the Google Cloud pricing profile.

— m-and-a-it-integration-cost-benchmark

Salesforce ELA carve outs require ELA scope segmentation, with the carve out receiving a smaller volume tier and typically losing 10 to 18 percent of the parent's discount. ServiceNow tiered subscription packs split based on user and workflow counts, with the carve out receiving a smaller pack pricing tier. Workday subscription unit pricing splits cleanly because the unit definitions are user based, but the carve out loses the parent's negotiated discount tier and typically prices 12 to 22 percent higher per unit. AWS EDP commitments and Google Cloud CUDs do not transfer cleanly; the carve out typically runs on pay as you go during the TSA period and negotiates its own commit at TSA exit. See the Microsoft pricing profile, the Oracle pricing profile, the SAP pricing profile, the Salesforce pricing profile, and the ServiceNow pricing profile.

Microsoft EAs typically permit divestiture assignment via amendment but the carve out falls to a smaller volume tier. Oracle ULAs require ULA certification or split. SAP requires document tier and digital access recalculation. Salesforce ELAs require scope segmentation. ServiceNow and Workday split user based. AWS EDP and Google Cloud CUDs do not transfer; the carve out runs on pay as you go during TSA and negotiates standalone at TSA exit.

— m-and-a-carve-out-it-cost-benchmark