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23 April 2024

Key Considerations for Selecting a Software Escrow Agent


A Software Escrow Agreement involves three key parties: the software customer, software supplier, and an independent escrow provider. Under the agreement, the software supplier periodically deposits the software's source code with the escrow provider for secure storage. If predefined release events, such as the supplier's failure, occur, the source code is released to the software customer. The customer can then use the escrow deposit to maintain the software, either in-house or by engaging another supplier.

The role of a Software Escrow agent is crucial in ensuring the protection and continuity of business-critical applications. Here's a breakdown of their key responsibilities:

  • Supporting the drafting and negotiation of the Software Escrow Agreement between the software provider and software end-user(s).
  • Securely storing periodic source code deposits made by the software provider in a physical or virtual escrow vault.
  • Conducting Software Escrow Verification testing on the escrow deposit to ensure it is correct, complete, and can be utilized by the end-user in a release event.
  • Releasing the escrow deposit to the software end-user(s) if release event conditions are met.

For businesses, choosing the right software escrow provider is paramount. Here are the essential factors to consider when selecting a software escrow agent:


Look for a provider with a proven track record and extensive experience in the industry. Consider factors such as the duration of their service provision and client testimonials across diverse sectors and regions. Larger companies may offer added stability during economic fluctuations.


Verify if the escrow agent holds accreditations like ISO 27001, which ensures adherence to rigorous information security standards. These certifications signify a commitment to maintaining the highest levels of data security and quality management.


Prioritize providers with robust security measures for both physical and virtual vaults. Ensure they have a Security Operations Center (SOC) for continuous monitoring and incident response to safeguard intellectual property and source code.

Legal Expertise

Choose an escrow agent with legal expertise to navigate complex legal frameworks, customize agreements, and ensure compliance with evolving regulations. Legal oversight guarantees clarity in negotiations and facilitates the timely release of materials when needed.

Global Presence and Diversification

Choose a provider with a global presence to ensure scalability and compliance with international regulations. Look for diverse escrow agreement templates and service offerings tailored to various jurisdictions and environments.

Escrow Account Management Services

Select an agent that offers advanced account management services, such as secure online portals for streamlined depositing and management processes. These services enhance software resilience and the proactive management of escrow portfolios.

In conclusion, choosing a software escrow agent requires careful consideration beyond just fees. Evaluating factors such as experience, accreditations, security measures, legal expertise, global presence, and account management services is crucial for establishing a robust software escrow agreement. By prioritizing these considerations, businesses can ensure the protection and continuity of their critical software applications.


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