Boards are doing two things at once in 2025: buying companies and cutting people. This blog looks at the impact of these twin forces on your software licensing and what SAM teams need to do to ease the squeeze.
2025 has been an interesting year. On the one hand, dealmakers are back. EY-Parthenon’s latest Deal Barometer expects corporate M&A volumes to finish around 10% higher in 2025 than 2024, with a further 3% growth forecast for 2026₁. In Europe, half of dealmakers say they expect M&A activity to increase over the next 12 months, despite volatility.₂
On the other hand, job cuts are accelerating. By the end of October 2025, employers had announced over 1.09 million job cuts in the US alone – a 65% jump on the same period in 2024 and the highest level since the pandemic.₃
Surveys suggest this isn’t a one-off adjustment: around 39% of companies say they’ve already made layoffs in 2025, 35% expect more before year-end, and close to 6 in 10 expect layoffs are likely in 2026, often citing economic uncertainty and AI adoption as key drivers.₄
Put simply: 2025 has been a year of consolidation and contraction and 2026 will continue the trend.
For IT procurement, IT leaders and SAM/ITAM teams, this combination creates a very specific challenge: how to manage this level of organisational churn from a software licensing perspective.
M&A: When Two Licensing Estates Collide
Rising M&A means that every deal is also a merger of two (or more) messy licensing histories.
When you acquire or merge with another organisation, you don’t just inherit its people and systems. You inherit:
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their vendor relationships and discount structures
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their contract terms, metrics and renewal cycles
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their licensing tiers and bundles
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their historical true-ups and commitments
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their audit and compliance risk
And critically, you often inherit duplicate licences for the same products.
A representative scenario after a merger:
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Both companies run the same database, CRM, collaboration or ERP platform.
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Each has its own enterprise agreement, different discount levels and different term lengths.
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Each has made long-term commitments based on their previous size and usage profile.
Without deliberate rationalisation, the combined organisation can end up:
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paying twice for the same product
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carrying licences that no longer align to the new user base
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stuck with overlapping contracts that can’t easily be exited or novated
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facing a vendor audit at precisely the moment when internal data is least reliable
In a world where deal volumes are growing in 2025 and expected to grow again in 2026, this is an issue many organisations will face.
Layoffs: When User-Based Models Don’t Shrink with Headcount
At the same time, organisations are aggressively reducing headcount to protect margins and fund transformation.
A report by Challenger, Gray & Christmas shows more than 1 million planned job cuts were announced in 2025 to October, 65% more than in 2024, with October itself marking the worst single month for layoffs in over two decades.₅
Surveys of business leaders show that 58–60% of companies expect layoffs to be likely in 2026, and around 4 in 10 plan to replace workers with AI by then.₆
You might expect licence costs to fall in lockstep with headcount. In practice, they rarely do.
Most major enterprise vendors still rely heavily on human-centric metrics: named users, FTE bands, devices, cores, authenticated accounts. Contracts often include:
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minimum seat or spend commitments
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fixed multi-year terms
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true-up mechanisms based on peak usage
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restrictive termination or reduction clauses
So when headcount drops:
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the organisation may still be contractually committed to pre-layoff user volumes
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the window to reduce quantities may only come at renewal, not at the point of change
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aggressive consolidation can even push you out of compliance if roles and access patterns change faster than entitlements are updated
The net effect is a structural mismatch: workforce shrinking, licence commitments fixed.
Where It Hurts: The Squeeze in the Middle
Individually, M&A and layoffs each complicate licensing. Together, they create a squeeze from both sides:
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On the M&A side, you’ve got too many contracts and too much duplication.
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On the layoffs side, you’ve got too much committed capacity and too little flexibility.
Pull those together and you end up with:
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overlapping estates you’d like to rationalise
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licence pools sized for a pre-deal, pre-layoff world
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vendors eager to renegotiate on their terms, not yours
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heightened audit risk while your internal data is unstable
All of this is happening against a macro backdrop where M&A volumes are forecast to keep rising into 2026 and a majority of companies expect further layoffs. The message is clear: licensing models that assume stability are now fundamentally out of step with reality.
What IT Procurement and SAM/ITAM Leaders Should Do Now
You can’t change the macro trends, but you can change how prepared you are for their impact on software.
Three priorities stand out:
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Get a single, integrated view of your estate
Before you can rationalise, you need to know what you own and how it’s used across all entities. That means:
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consolidating entitlement and contract data from both legacy and acquired organisations
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understanding minimum commitments, renewal dates and true-up terms
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mapping licences to actual headcount and usage patterns post-change
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Build a playbook for post-deal and post-layoff licensing
Treat licensing as a workstream in every integration or restructuring plan, not an afterthought. Your playbook should cover:
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how quickly you can identify and eliminate duplication
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which contracts can be novated, merged, or exited
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how to sequence renewals to regain negotiation leverage
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how to resize user-based licences safely after headcount changes
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Negotiate for flexibility, not just discount
In the next cycle of renewals and new deals, price matters but flexibility matters more. Push for:
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scalable user bands rather than rigid seat counts
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rights to reduce quantities mid-term in defined circumstances (e.g. divestiture, restructuring)
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aligned renewal dates across major contracts
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audit-safe wording for future reorganisations
Turning Complexity into Control
M&A and workforce change aren’t going away. The organisations that cope best will be those that treat software licensing not as a static cost line, but as a strategic lever that has to keep pace with structural change.
That starts with visibility, continues with a clear rationalisation strategy, and ends with contracts designed for a world where “business as usual” no longer exists.
If you’re planning a transaction, restructuring, or both and you’re not sure what it means for your software estate, that’s the moment to bring in a specialist view. Livingstone helps organisations understand what they really own, where they’re over-committed or exposed, and how to reshape licensing so it fits the business they have now, and the one they’re heading towards. And we help you design and negotiate contracts that fit your new world order. Whether you're in need of our new SAM managed Service, our contract optimisation and negotiation service, or
Need help?
Whether you're in need of our new SAM managed Service, or our contract optimisation and negotiation service, get in touch with our team. We can work with you in confidence to review any planned M&A or layoff activity to understand the financial implications on your software contracts.
Sources
₁ US M&A momentum accelerates: EY-Parthenon forecasts 2026 deal activity to surpass 2025 | EY - US
₂ https://ionanalytics.com/insights/mergermarket/european-ma-outlook-2026-deals-doubts-and-divergences
₄ https://allwork.space/2025/09/6-in-10-businesses-plan-2026-layoffs-fueled-by-ai-and-economic-fears
₆ https://www.resume.org/6-in-10-companies-plan-to-lay-off-employees-in-2026-amid-economic-uncertainty
