How to Build Flexibility Into a Broadcom Enterprise License Agreement

How to Build Flexibility Into a Broadcom Enterprise License Agreement

Broadcom’s Enterprise License Agreements (ELAs) are known for being rigid, multi-year contracts. By default, these agreements lock in specific products and quantities for 3–5 years with minimal options to adjust.

For CIOs, procurement leaders, and IT Asset Managers, this lack of flexibility can be a significant problem, as business needs are constantly evolving.

Still, a rigid Broadcom ELA won’t budge unless you negotiate that flexibility up front. Read our comprehensive guide to Broadcom Enterprise License Agreements (ELA/PLA) and Framework Contracts.

The result of not doing so? Companies often end up paying for “shelfware” (licenses that sit unused) or find themselves stuck with outdated products and misaligned terms during major business changes.

Why Flexibility Matters: A flexible Broadcom enterprise agreement is crucial because enterprise environments evolve rapidly. Mergers, acquisitions, divestitures, downsizing, and technology shifts – any of these can render a fixed license entitlement either excessive or insufficient.

Without contractual flexibility, you risk overpaying and under-utilizing what you’ve bought. In short, Broadcom ELA flexibility isn’t just nice to have; it’s a strategic necessity to ensure you only pay for what you need and can adapt as your needs change.

Below, we break down the problems with Broadcom’s default ELA terms and how to negotiate critical clauses that introduce much-needed flexibility into your agreement.

The Problem with Default Broadcom ELAs

Broadcom’s standard ELA terms favor the vendor by default.

Key issues with the “out-of-the-box” Broadcom ELA include:

• Locked-In Quantities and Products: Once you sign, you commit to a set number of licenses for specific products throughout the 3–5 year term. Broadcom expects you to adhere to those fixed quantities and product mix, regardless of actual usage or changing needs. If you need more, you can usually add it (often at an additional cost), but if you need less or want to drop a product, the default contract won’t allow you to adjust downward.
• No True-Down Rights: Broadcom ELAs typically do not allow you to reduce license counts mid-term. While “true-up” (adding licenses if you grow) is expected (and Broadcom will happily charge you for more usage), “true-down” (reducing licenses if usage drops) is not part of the standard deal. You pay for the initial committed quantity even if your actual usage decreases dramatically.
• No Mid-Term Adjustments: In a typical Broadcom ELA, there are no built-in checkpoints to renegotiate or adjust terms until the contract is up for renewal. There’s no mid-term review clause by default. This means if two years into a five-year deal your company undergoes a major change (like a reorganization or a shift in IT strategy), you can’t formally adjust your contract to match the new reality unless Broadcom agrees as an exception.
• Strict Product Bundling: Broadcom often bundles multiple products (sometimes from its various acquired companies, such as CA, Symantec, and VMware) into a single ELA package. By default, swapping products is not allowed – if you find one Broadcom product in the bundle that isn’t being used, you can’t exchange it for another without negotiating a special provision. You’re essentially locked into the initial portfolio of products for the contract term.
• Limited Exit Options: Except for outright termination (which typically comes with substantial penalties or forfeiture of fees), standard Broadcom agreements provide no means of escape. If your company’s strategy changes (for example, moving away from a certain software or migrating to cloud alternatives), the ELA won’t let you drop that Broadcom product from your contract. You either keep paying for it or pay a steep price to terminate that portion.

In summary, a default Broadcom ELA is inflexible by design. The onus is on the customer to proactively negotiate flexibility clauses; otherwise, Broadcom assumes you’ll accept the risk of a static deal.

Next, we’ll discuss the specific flexibility mechanisms you should insist on during negotiations to counter these rigid terms.

Key Flexibility Mechanisms to Negotiate

To build flexibility into a Broadcom ELA, certain contract clauses and rights should be negotiated up front.

Here are the key flexibility mechanisms savvy buyers focus on:

• True-Down Rights: The ability to reduce license counts during the term. This is one of the most important clauses to seek. True-down rights let you adjust quantities downward (for example, reducing the user or license count by a certain percentage annually or at specific intervals) without penalty. Broadcom’s default is one-way (you can only add, not remove), so negotiate for the right to decrease licenses if business demand falls. Even a provision like “up to 10% reduction in licenses per year with no fee” can save you from paying for unused capacity. This ensures you won’t be left with excess licenses (“shelfware”) in the event of layoffs, project cancellations, or efficiency gains.
• Partial Returns / Credit Offsets: If Broadcom refuses a full true-down clause, push for a compromise such as partial returns or credits. This means if you have unused licenses, you could return a portion for credit toward future purchases or renewals. For example, consider negotiating that any unused subscription value can be rolled over as a credit toward expanding other Broadcom products or extending the term. While not as ideal as a true cash reduction, credits at least ensure you recapture some value from shelfware instead of it being a total loss. It’s a fallback: if they won’t let you reduce the quantity and lower your bill, they might allow you to apply the unused value elsewhere in Broadcom’s portfolio.
• Mid-Term Checkpoints (Adjustment Clauses): Insert a clause for a formal mid-term review of the contract. For instance, in a 3-year deal, consider having a checkpoint at the 18-month mark. At this review, both parties can assess license utilization and business changes, and you should have the right to adjust the scope or pricing accordingly. This could mean reducing quantities (true-down), swapping out products, or re-aligning fees to match actual deployment. A mid-term checkpoint clause essentially provides an opportunity to renegotiate key terms under certain conditions (e.g., if your company divests a division or if a product isn’t being used as anticipated). It creates an escape valve so you’re not completely stuck for the entire term. Broadcom may not volunteer this, but for larger deals, you can often negotiate one formal adjustment window.
• M&A and Divestiture Flexibility: Business events such as mergers, acquisitions, or divestitures can disrupt a fixed license agreement. You might suddenly have too many licenses (if you sell a business unit) or not enough coverage (if you merge and need to extend software to new entities). Negotiate M&A clauses that explicitly allow license transfers or splitting the agreement in such cases. For example, include language such as “Licenses may be transferred or assigned to an affiliate or divested entity in the event of corporate reorganization, without additional fees.” This ensures if you spin off a division, you can carve out the licenses that division was using and transfer them to the new owner (or simply drop them from your count). Or if you acquire a company, you can extend your Broadcom licenses to cover the new users for the remainder of the term (possibly with a pre-negotiated pricing for the increase). Without this, Broadcom might force the divested unit to buy its own licenses (double-paying) or charge a hefty fee to recognize any transfer. M&A flexibility protects you from being trapped or penalized during corporate changes.
• Product Swap Rights: In a long-term ELA, it’s common that some products turn out to be less useful than anticipated, or Broadcom may introduce new solutions you want instead. Negotiate the right to swap products of equivalent value. For instance, you might have a Broadcom security software product in your bundle that you end up not deploying – a swap clause would allow you to replace it with another Broadcom product (perhaps something from the CA or VMware portfolio) of similar license value, once per year or at the midpoint. This keeps the overall contract value the same, but allows you to reallocate your investment to where it’s actually needed. Product swap rights ensure you’re not stuck paying for an obsolete or unused product for years; you can evolve your ELA portfolio in line with your technology strategy. Vendors resist this because it adds complexity for them, but it’s a reasonable ask, especially in multi-product deals. Even if it’s limited (say, one swap during the term, or swapping up to a certain percentage of the value), it is far better than no recourse at all.

These mechanisms are not standard in Broadcom ELAs, but they can often be achieved through negotiation – especially if your deal is large or strategically important to Broadcom.

The key is to identify which flexibility levers matter most for your situation (e.g., if you anticipate downsizing, true-down is critical; if you plan acquisitions, an M&A clause is a must; if product uncertainty is a concern, swap rights are vital). Make those non-negotiable points in your discussion.

Read about the changes to VMware contracts, VMware Contract Changes Under Broadcom – What’s Different and How to Negotiate.

Flexibility Levers in Broadcom ELAs: Default vs. Best Practice

To clearly see how Broadcom’s default stance contrasts with a more customer-friendly approach, below is a table of common ELA flexibility clauses:

Explanation: As shown above, Broadcom’s starting point is rigid on all counts – no reductions, no mid-term changes, no swapping, and limited handling of corporate changes.

The negotiated best practices demonstrate the kind of flexibility clauses customers should aim for to make the agreement more balanced.

Each lever shifts some risk back to Broadcom (rather than the customer bearing all the risk of over-commitment or change).

Risks of No Flexibility

What happens if you sign a Broadcom ELA as-is, with no added flexibility? Several risks become apparent:

• Paying for Shelfware: Without true-downs or adjustment rights, if your usage drops, you will continue to pay for licenses you aren’t using. This “shelfware” can consume a significant portion of your IT budget with zero return on investment. For example, contracting for 1,000 users and then only deploying 800 means 200 licenses are paid for every year without any value to your business.
• Misalignment After M&A: In the event of a merger or divestiture, a rigid ELA may not align with the new company structure. If you divest a business unit, you may end up paying for licenses that the spun-off company should use (but is legally unable to, unless transferred) or leave them unused. Conversely, if you acquire a company, your ELA might not allow simply adding those new users under the same agreement without a separate purchase (or Broadcom might use that as leverage to up-sell). Without M&A clauses, corporate changes can lead to compliance issues or paying twice for the same software.
• Locked into Obsolete Products: Technology evolves quickly. Over a 5-year term, some software products may become outdated, less strategic, or replaced by better alternatives (maybe even alternatives that Broadcom itself releases). If your contract doesn’t allow swapping or dropping products, you’re stuck funding an obsolete tool. Meanwhile, you might have to pay again for a new solution outside the ELA. This is inefficient and frustrating for IT teams that want to modernize.
• Inability to Downsize or Pivot: Businesses must adapt – whether it’s cost-cutting in a downturn, shifting to cloud services, or changing strategic priorities. If your Broadcom ELA has no flexibility, you have zero ability to downsize your commitments mid-term. Even if you stop a project or halve your workforce using a certain tool, the contract obligates you to continue paying for the original volume. In essence, the ELA becomes a financial straitjacket, forcing your IT spend in directions that might no longer align with business reality.

In short, not negotiating flexibility means you, the customer, bear all the risk of change.

Broadcom’s revenue is protected and predictable, while your IT spending might become wasteful or misaligned over time. This imbalance is precisely why negotiating flexibility is so critical.

Negotiation Tactics for a Flexible ELA

Knowing what to negotiate is one thing – actually getting Broadcom to agree is another. Broadcom is known for tough stances in negotiations, so you’ll need a solid strategy and leverage.

Here are some negotiation tactics and angles that can help you secure flexibility clauses:

• Leverage Multi-Year Commitments: Broadcom wants multi-year ELAs because they guarantee revenue. Use that as a bargaining chip. Tie your willingness to sign a long-term deal to the inclusion of flexibility clauses. For example, “We’re prepared to commit to a 3-year enterprise agreement, but only if it includes an annual true-down right and a mid-term adjustment clause.” This frames flexibility as part of the deal value – if Broadcom wants the long-term commitment, they need to share the risk of changing needs.
• Offer Concessions for Flexibility: Sometimes, you can trade something to get something. One approach is offering an early renewal or an expanded purchase in exchange for flexibility. If your current Broadcom contracts haven’t expired, you could say, “We’ll consolidate and renew everything a year early (or we’ll include an additional product in the ELA) if you give us a product swap option and M&A transfer rights.” By giving Broadcom an immediate win (early renewal = guaranteed revenue now), you justify getting better terms in return. Essentially, you sweeten the pot so they’re more inclined to agree to your asks.
• Use Deal Size and Portfolio as Leverage: The larger your deal and the more Broadcom product lines it encompasses, the greater your negotiating power. Don’t be shy about this – if you’re bringing Broadcom a significant sum or bundling many products, expect flexibility in return. Broadcom knows that rewriting deals is extra work, but for a major customer or a strategic logo, they will make exceptions. You can say, “Given the size of this investment and that we’re committing to Broadcom across security, infrastructure, and DevOps tools, we need assurance that we can adjust if things change.” Implicitly, Broadcom risks losing a big deal if it remains inflexible, so use that to push for concessions.
• Insist on Rollover Value: When true-down rights meet resistance, counter with a rollover credit proposal. This is a more palatable ask for them than outright reduction. Emphasize how this maintains the long-term spend with Broadcom. For example, “If we over-purchase, we’re not asking for money back, just that the value we paid can be applied to other Broadcom needs.” This way, Broadcom isn’t losing revenue in total, just reallocating it. It’s a fair compromise and one that financially oriented negotiators at Broadcom may accept to close the deal.
• Be Prepared to Shorten the Term: If Broadcom absolutely refuses to include any mid-term flexibility, your fallback tactic is to shorten the contract duration. It’s risky for them – they’d prefer a 5-year locked-in deal, so use that to your advantage. For instance, “If you can’t accommodate a mid-term adjustment clause in a 5-year ELA, then we will only sign for 2 years. That way, we can re-evaluate sooner.” Often, faced with the prospect of a shorter term (and thus a sooner fight for renewal), Broadcom might relent on adding at least one flexibility provision to secure a longer term. If they don’t, at least you aren’t stuck for 5 years; you’ll have an earlier chance to renegotiate the whole thing.
• Data-Driven Justifications: Back up your requests with data. Bring internal usage forecasts, historical utilization rates, or business change projections to the negotiation. Justify why you need flexibility. For example, “Our user count has fluctuated +/- 15% year over year, so a 10% true-down clause simply aligns the contract to realistic usage patterns.” Or, “We are planning a divestiture next year; without an M&A clause, we’d be paying for licenses that the spun-off entity should be responsible for.” When Broadcom sees that your asks are grounded in concrete business scenarios, it’s harder for them to dismiss them as merely nice-to-haves. It shows that you’re negotiating in good faith to craft a deal that benefits both parties in the long term, rather than trying to game the system.

Finally, remember to get any flexibility concessions documented clearly in the contract language.

Verbal assurances or vague promises (“we’ll work with you if something happens”) are not enough – you need specific, unambiguous wording for each right or option you negotiated.

If Broadcom’s contract drafts come back without the agreed-upon clauses, push back and insist they be included. Now let’s address a few frequently asked questions that many customers have regarding Broadcom ELAs and flexibility:

FAQs

Q: Does Broadcom allow true-down rights in its ELAs?
A: Not by default. Broadcom’s standard practice is that once you commit to several licenses in an ELA, you cannot reduce that number until the term is over. However, customers can negotiate true-down rights. It typically requires pushback and possibly limiting the extent (for instance, a capped percentage reduction annually). Broadcom may agree in some cases, especially for large deals, to an annual true-down or a one-time reduction at a certain point, but you must explicitly ask for it. If you don’t negotiate it into the contract, assume you won’t have any ability to decrease your license counts mid-term.

Q: Can I swap products within a Broadcom ELA if our needs change?
A: By default, no. Broadcom ELAs are usually set with a fixed list of product licenses – you’re expected to use what you bought for the whole duration. They do not normally permit swapping one product for another on the fly. That said, you can negotiate a product swap clause. This clause would allow you to exchange an unused or underused product license for a different Broadcom product of equal value (perhaps restricted to once per year or requiring notice). It’s not standard, but if having the flexibility to substitute products is important for your organization (for example, you’re unsure which tool you’ll end up using more), bring it up during negotiations. If Broadcom won’t allow swaps, at a minimum, try to ensure your contract is structured so you can drop products at renewal or only buy what you’re sure you’ll use.

Q: How do I handle M&A scenarios under a Broadcom contract?
A: The best approach is to address it upfront in the ELA. Negotiate clauses that cover mergers, acquisitions, and divestitures. For example, include wording that if your company acquires another, the new employees can be added to the ELA at pre-negotiated rates (or at least without punitive pricing). For divestitures, ensure that you can transfer the relevant licenses to the new entity or terminate those licenses without incurring any penalties. If your Broadcom contract already exists and lacks such clauses, you should open a dialogue with Broadcom as soon as an M&A event is on the horizon. Broadcom might require the acquiring or divested company to sign a new agreement for continued use of the software – a situation you want to avoid if you’ve essentially already paid for those licenses. In summary, proactively include M&A flexibility language so that when a corporate change occurs, your software licensing can adjust smoothly rather than becoming a costly headache.

Five Actionable Strategies for ELA Flexibility

To conclude, here are five concrete strategies you can apply to ensure flexibility in your Broadcom ELA negotiations:

1. Always Negotiate at Least One Flexibility Lever: Don’t sign an ELA without at least one flexibility clause. Whether it’s a true-down right, a product swap, or a mid-term checkpoint, ensure there is something in the contract that allows you to adapt. It’s better to have a partial safety valve than none at all.
2. Insist on M&A and Divestiture Protections: If your company might undergo changes (and almost every company could), build M&A clauses in from the start. This protects you from scrambling or paying extra later. Even if you think an event is unlikely, having the clause costs nothing unless needed, but lacking it could cost dearly.
3. Demand Annual Reviews or Rollover Credits: To avoid paying for shelfware, push for an annual usage review with Broadcom. Ideally, this is a formal checkpoint where you can adjust downward; however, if not, then secure rollover credits for any unused allotment. Regular check-ins keep both sides aligned and force recognition of over-licensing issues early.
4. Use Multi-Year Commitment as Leverage for Flexibility: Make it clear that flexibility is a condition for a long-term deal. For instance, “We’ll consider a 5-year agreement, but only if we have options to adjust along the way.” If Broadcom won’t budge on flexibility, do not reward them with a long-term lock-in – it’s better to go shorter term (or even stay annual) and renegotiate sooner.
5. Justify with Data and Plan for Change: Come to the table with internal data (usage trends, growth or reduction forecasts) and a narrative of how your business might change. Showing a plan for cloud migration, potential divestitures, or past volatility in use reinforces the need for flexibility. Broadcom is more likely to agree if you’ve made a strong, data-backed case that a rigid contract simply won’t work for either party long-term.

By following these strategies, you can transform a one-sided Broadcom ELA into a more balanced, adaptive agreement. The goal is to share the risk of change with Broadcom, rather than absorbing it all yourself.

With true flexibility built into the contract, you’ll avoid paying for software you don’t use, stay aligned through organizational changes, and ensure that your enterprise agreement genuinely supports your business’s evolving needs instead of hindering them.

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