Why Companies Worldwide Choose U.S. Software & SaaS Escrow Agents

As businesses become increasingly dependent on software, SaaS platforms, and proprietary technology, the risks associated with vendor failure, insolvency, or product discontinuation have grown. To manage these risks, companies worldwide rely on software escrow and SaaS escrow agreements administered by independent escrow agents.

In global technology transactions, many parties, regardless of headquarters, choose a U.S. based technology escrow agent. This choice is driven not by geography but by legal certainty, bankruptcy protections, and enforceability under U.S. law.

What Is Software Escrow and SaaS Escrow?

Software escrow is a risk-management arrangement in which critical software materials, such as source code, build instructions, and documentation, are deposited with a neutral third party (the escrow agent) and released to a beneficiary if defined events occur.

SaaS escrow extends this concept to cloud-based and hosted applications and may include:

• Deployment scripts and infrastructure configuration
• Container images and orchestration files
• System documentation and architecture diagrams
• Access instructions necessary to maintain continuity

Both software escrow and SaaS escrow are designed to protect business continuity, not to guarantee software performance.

Learn more about how PRAXIS Technology Escrow supports enterprise continuity.

Why Technology Escrow Has Become a Global Best Practice

Technology escrow is now common in:

• Enterprise software licensing agreements
• SaaS subscription agreements for mission-critical systems
• Mergers and acquisitions (M&A)
• Secured lending and financing transactions
• Joint ventures and strategic partnerships
• Government and regulated industry contracts

As technology risk increases, escrow has become a standard governance and vendor-risk tool rather than an exceptional measure.

The U.S. Advantage: Bankruptcy Code §365(n) and Technology Escrow

One of the main reasons companies select U.S. escrow agents is alignment with Section 365(n) of the U.S. Bankruptcy Code.

What §365(n) Does:

• Protects licensees of intellectual property during vendor bankruptcy
• Allows licensees to retain IP rights and continue using technology
• Ensures enforceable access even if the licensor rejects the agreement

Escrow provides the practical means to exercise these rights. Without escrow, §365(n) protections may exist in theory but can be difficult to enforce operationally. More on bankruptcy protections and software escrow is available through PRAXIS. 

Why International Companies Use U.S. Software and SaaS Escrow Agents

Predictable Technology and Bankruptcy Law

The U.S. has one of the most developed bodies of law governing:

• Intellectual property licenses
• Bankruptcy and insolvency proceedings
• Commercial contract enforcement

This predictability reduces uncertainty when continuity matters most.

No True Equivalent to §365(n) in Many Jurisdictions

While countries such as the UK, Australia, and Canada provide varying degrees of insolvency protection, none offer a single, purpose-built statute equivalent to §365(n) for technology licensees.

As a result:

• Protection in those jurisdictions often relies heavily on contract drafting
• Outcomes may be more discretionary or court-dependent
• Cross-border parties often default to U.S. escrow frameworks for consistency

Neutral Third-Country Escrow in Cross-Border Deals

In international software and SaaS transactions:

• Choosing one party’s home jurisdiction can create perceived imbalance
• A U.S. escrow agent is often viewed as a neutral, globally accepted intermediary
• This neutrality helps close deals faster and reduces negotiation friction

Enterprise, Lender, and Investor Expectations

Large enterprises, banks, and private equity firms frequently:

• Require or strongly prefer U.S. based software escrow arrangements
• Maintain internal policies referencing U.S. bankruptcy and IP frameworks
• Expect standardized escrow, release, and verification processes

Using a U.S. escrow agent often simplifies internal approvals.

Operational Readiness During Release Events

Release events, such as insolvency or abandonment, are time-sensitive.
Experienced U.S. technology escrow agents are typically structured to:

• Act quickly and neutrally
• Follow documented, auditable release procedures
• Support enterprise-scale releases without adjudicating disputes

This operational discipline is critical during distressed scenarios.

The Role of Technical Verification in Software & SaaS Escrow

Technical verification is the process of confirming that escrow deposit materials fulfill the following:

• Have actually been deposited
• Are complete and readable
• Match the agreed inventory
• Can be reasonably used if released (depending on scope)

Verification:

• Reduces the risk of unusable escrow deposits
• Increases the practical value of escrow
• Supports enforceability and risk mitigation

Verification reduces the risk of unusable deposits, increases practical value, and supports enforceability, without guaranteeing software quality. Learn more at PRAXIS verification services. 

Key Characteristics Clients Expect from U.S. Technology Escrow Agents

Regardless of industry or geography, Sophisticated clients often expect:

• Strict neutrality and defined responsibilities
• Strong security controls such as SOC frameworks
• Appropriate Errors & Omissions (E&O) insurance
• Demonstrated experience with enterprise software and SaaS transactions
• Clear release and successor agent procedures
  

These characteristics align closely with U.S. market norms.

Addressing Data Sovereignty and Global Compliance

Using a U.S. escrow agent does not require:

• Storing customer data in the U.S.
• Violating local data residency laws

Escrow agreements can be structured to:

• Exclude personal or regulated data
• Limit deposits to source code and operational materials
• Specify storage jurisdictions and transit rules contractually

Agent jurisdiction and data storage location are separate considerations.

When a U.S. Software or SaaS Escrow Agent Makes the Most Sense

A U.S. based escrow agent is particularly appropriate when:

• The beneficiary or lender is U.S.-based
• The governing law is U.S. law
• Technology continuity is mission-critical
• The transaction is cross-border
• Enterprise or lender approval processes are involved
• Bankruptcy risk must be managed predictably

Conclusion: Software Escrow as a Global Risk-Management Tool

Software escrow and SaaS escrow are no longer niche tools—they are foundational components of modern technology transactions. While escrow services exist worldwide, U.S. technology escrow agents are often chosen for their alignment with U.S. bankruptcy law, predictability, neutrality, and enterprise expectations.

For companies operating globally, the decision to use a U.S. escrow agent is less about location and more about risk certainty, enforceability, and continuity.

For more information, visit PRAXIS Technology Escrow.