The basics of Microsoft Enterprise Agreements have been covered here many times before, but in order to understand the subject of post-EA acquisitions, it is helpful to revisit the most fundamental of EA basics: under the Microsoft EA, an organization is required to license a specific desktop bundle across all Qualified Users or Desktops in the Enterprise. So, during the term of an EA, the Enrolled Affiliate is required to pay for a license for all new Qualified Desktops or Users added to the Enterprise. For some companies, increases in Qualified Users or Desktops are due simply to workforce growth. However, for enterprise-level organizations, many increases in Qualified Users or Desktops may come from business-unit or entity acquisitions.

To accommodate multi-level, multi-entity organizations, Microsoft allows the Enrolled Affiliate define the scope of the "enterprise" at Enrollment by permitting the Enrolled Affiliate to choose how its Affiliates are treated. An Enrolled Affiliate can choose to exclude all Affiliates, exclude a select number or Affiliates, or include all Affiliates. To handle new Affiliates acquired after the enrollment, the Enrolled Affiliate chooses, at Enrollment, whether it wants to auto-enroll all future Affiliates under the EA.

For auto-enrolled Affiliates, the Enrolled Affiliate is required to deploy enterprise software across all Qualified Users or Desktops, and these new licenses then are included in next annual True Up. If the new Affiliate changes the number of Qualified Users or Desktops under an EA by more than 10%, or if it already has an existing Enterprise Agreement, Microsoft is required to work with the Enrolled Affiliate in good faith to determine how to accommodate these changed circumstances. However, for Enrolled Affiliates that choose not to auto-enroll, new Affiliates must be licensed under a separate Enrollment or other license agreements with Microsoft.

Whether or not to auto-enroll typically depends on the EA customer’s growth plans and the strength of its IT organization. If the enterprise has a well-defined acquisition plan – including known targets that will rely on the company’s IT organization for support and maintenance – auto-enrollment often makes sense. Under those circumstances, the EA can eliminate the administrative burden of establishing a new Enrollment for the acquired Affiliate and can offer reductions in licensing costs from stepping up to new volume price levels. For many other organizations, however, it often makes more sense not to choose to auto-enroll new Affiliates, so that the necessary evaluation of the acquired Affiliate’s IT environment can occur prior to making any enrollment decisions moving forward.

When in doubt on any of these issues, consult with knowledgeable legal counsel