A true up is the payment that brings software usage back into line with purchased entitlement, a routine part of audit settlements and a cost a buyer can inherit at close.
What is true up? A true up is the payment that reconciles what an organisation has deployed with what it is licensed to use. When usage runs ahead of entitlement, the publisher requires a true up to close the gap, covering the additional licenses and often the back maintenance owed for the period of overuse. In M&A a true up is the dollar form of a compliance finding. It is what a buyer pays, or negotiates down, when a target has quietly outgrown its licenses before the deal.
A true up turns an abstract compliance risk into a concrete number. During an audit or a renewal the publisher counts actual usage, sets it against entitlement, and presents the shortfall priced at the relevant metric. The figure usually opens at list price and includes back maintenance, which is why an opening demand can be several times the cost a disciplined buyer eventually settles for. Understanding the difference between the list ceiling and the likely settlement is central to defending against it.
True ups arise most often at predictable moments. A subscription renewal exposes user growth. An audit measures processors or indirect access. An integration multiplies seats overnight. In a deal context the danger is that the target has accumulated a latent true up that no one priced. It does not appear in the accounts, so standard financial due diligence misses it, and it surfaces as a publisher demand once the buyer owns the estate.
The size of a true up depends on the metric, the period of overuse, and the publisher. A named user breach is counted differently from a processor breach or an indirect access claim, and each publisher applies its own multipliers and maintenance terms. Quantifying the true up before close, with a worst case and a likely settlement, lets the buyer fold the number into price, hold it in escrow, or require an indemnity. True up negotiation is commercial and licensing advisory, not legal advice.
A true up is the largest component of the cost to cure, the full price of returning a non compliant estate to compliance. The cost to cure adds repurchase and remediation, but the true up is usually the headline number. Presenting it as a range, from the publisher list demand down to the expected settlement, gives the deal team a defensible figure to negotiate around rather than a single inflated number that either kills the deal or gets waved through.
| Driver | What it measures | Effect on the number |
|---|---|---|
| License metric | Users, processors, or indirect access | Sets how the shortfall is counted |
| Period of overuse | Months or years non compliant | Adds back maintenance owed |
| Publisher policy | List pricing and multipliers | Inflates the opening demand |
| Negotiation leverage | Evidence and timing | Moves list down to settlement |
Related reading: see the M&A software glossary hub, plus effective license position and maintenance and support.
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