A named user license ties software entitlement to identified individuals, and uncounted or duplicated users are a frequent source of inherited overuse that surfaces in audits after a deal.
What is named user license? A named user license grants the right to use software to a specific, identified individual rather than to a device or a processor. Every person who accesses the software must hold a license, whether or not they use it concurrently. In M&A this model matters because named user counts grow quietly. Joiners, contractors, service accounts and duplicated identities all consume entitlement, and a target that has not tracked them carefully carries a latent shortfall that a publisher can price in an audit after close.
The strength of a named user model for a publisher is that it counts people, and people accumulate. Unlike a concurrent model that caps simultaneous use, a named user model requires a license for every individual with access, even occasional ones. Over years an organisation adds users faster than it removes them. Leavers stay provisioned, contractors keep accounts, and integrations merge two user populations into one inflated estate. Each uncounted identity is a license the target should hold and may not.
SAP is the clearest example. Its Named User licensing classifies individuals into types, and misclassification or undercounting is a recurring audit finding. The risk compounds with indirect access, where a third party system or an interface touches the licensed software on behalf of users who were never counted. A buyer that assumes the headcount equals the license count usually understates the exposure, because the real number includes service accounts and indirect users the target never registered.
In a deal the named user exposure is latent and unquantified in standard diligence. It does not appear in the financial accounts, only in the gap between provisioned identities and purchased entitlement. Public disputes show the scale. As of June 2026, SAP was reported to have pursued AB InBev for a reported 600 million dollars and Diageo for a reported 60 million, claims that turned in part on how users and indirect access were counted.
A named user license is one of several metrics a buyer must reconcile. Processor licensing counts hardware capacity, subscription licensing counts active seats over a term, and indirect access counts machine to machine usage. The same estate can be measured differently under each, and the choice of metric changes the cost to cure. Mapping which products use which metric is the first step in building an effective license position. This is commercial and licensing advisory, not legal advice.
| Metric | What it counts | Typical hidden exposure |
|---|---|---|
| Named user | Identified individuals with access | Leavers, contractors, service accounts |
| Concurrent user | Simultaneous sessions | Peak usage above the cap |
| Processor | Hardware cores or sockets | Virtualisation and new hardware |
| Indirect access | Machine to machine calls | Third party systems reading data |
Related reading: see the M&A software glossary hub, plus processor license and subscription license.
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