A portfolio company's VMware renewal is now a value creation decision, not a routine IT renewal. Broadcom sells VMware as per-core subscriptions with fixed support deadlines, so the cost is a recurring opex line that can move at each renewal. Operating partners should know the renewal date and the licensed core count before the first board pack, and plan the exit against the hold period rather than the next invoice.
Key dates: Licence-included pay-as-you-go Azure VMware Solution (AVS) deployments must move to portable VCF by 31 October 2026. Windows Server 2016 extended support ends on 12 January 2027. Licence-included AVS reservations must be exchanged by 30 August 2027. VMware vSphere 8 reaches end of general support on 11 October 2027.
This post applies our guide to leaving VMware after Broadcom to private equity. It is written for operating partners and the portfolio IT leads who report to them. Our private equity page covers our wider work with sponsors.
The licensing model changed under the current hold periods of many funds. Broadcom completed its acquisition of VMware on 22 November 2023. It stopped selling perpetual licences and new support (SnS) renewals for them in December 2023, and cut the core portfolio to two bundles: VMware Cloud Foundation (VCF) and VMware vSphere Foundation (VVF). Both are licensed per physical core, and each CPU counts as at least 16 cores. A host with two 8-core CPUs is licensed as 32 cores.
The effect on price is disputed, and you should read the public figures as claims, not benchmarks:
None of those figures comes from Broadcom, and none will match your portfolio company's quote. The point for a sponsor is simpler. VMware is no longer a fixed, sunk cost. It is a subscription that comes back to the board at every renewal, and the company's negotiating position depends on whether it has a credible alternative.
Analysts expect many companies to build one. Gartner research VP Julia Palmer said more than a third of workloads now on VMware will run on another platform by 2028.
We recommend putting VMware into the value creation plan as its own opex line, with two numbers beside it: the cost of renewing across the remaining hold period, and the cost of exiting. Our cost model guide shows how to build both honestly, including the one-off migration cost that the exit case has to carry.
The renewal date and the exit date are the two numbers that decide the strategy. A VMware exit takes planning and testing, and its savings arrive after the old hosts are switched off. A renewal signed in the wrong year can lock costs in past the point where the sponsor sells.
| Where the renewal falls | What we recommend |
|---|---|
| Early in the hold | Treat the exit as a value creation lever. Fund it as a project and bank the opex reduction before the sale process starts. |
| Mid-hold | Renew for the shortest term Broadcom will offer you, and use that term to complete the migration. Avoid multi-year commitments that outlast the plan. |
| Close to exit | Decide whether the exit finishes before the sale. Document the plan and the cost model if it cannot, so the buyer sees a managed position, not an open risk. |
The same discipline applies on the Azure side. Azure savings plans are one-year or three-year hourly spend commitments. They cannot be cancelled or refunded, and unused hourly commitment does not roll over. A three-year commitment signed in the final year of a hold passes to the next owner, which a buyer will price. Match the term to the plan.
A buyer's diligence team will ask the questions in this post. A portfolio company that has already answered them, and has either exited VMware or holds a dated plan to do so, gives the buyer one less thing to discount.
A carved-out business often runs on the parent's infrastructure for a period after completion, under a transitional services agreement (TSA). The VMware hosts and licences usually belong to the parent. The new company uses them as a service until the TSA ends, and then it needs its own platform.
That creates a decision with a hard date. The new company can buy its own VMware subscription and rebuild the parent's estate, or it can land each workload directly on its target platform. We recommend the second option in almost every case. Buying a new per-core VMware subscription for a business that is only just standing up commits it to the cost model a sponsor is trying to escape, and it means a second migration later.
Four points matter in carve-out planning:
Our carve-outs page covers separation more broadly, including standing up an independent Dynamics 365 environment before the TSA expires.
A buy-and-build strategy multiplies the VMware problem. Each bolt-on can arrive with its own hosts and its own renewal date, on licence terms that differ from the platform's. One may hold perpetual licences with SnS about to lapse, while another runs its servers at a hosting provider whose own VMware position has changed.
The tempting answer is to fold every bolt-on onto the platform company's VMware estate. We recommend against it. It adds cores to the platform's subscription and makes the group more dependent on the renewal it is trying to control. It also means each workload moves twice: once into the platform's VMware, and again when the group leaves VMware.
A better approach consolidates each bolt-on directly onto the group's target platform, with the same playbook every time:
Mixed routes are normal within one estate. We recently took an oil and gas company based in Scotland off its own VMware infrastructure using three routes: containerised applications moved to SUSE Rancher, the ERP was replaced with Dynamics 365 Finance & Operations, and other workloads, including the SQL Server estate, moved to Azure services. That client was not a PE portfolio company, but a bolt-on estate usually needs the same per-workload approach. The case study describes the project. Our bolt-on consolidations page covers the ERP and reporting side of bringing acquisitions together.
Most IT diligence asks how many virtual machines a target runs. That number does not drive VMware cost. Physical cores and contract dates do. We suggest these questions for any target with a VMware estate.
Question 6 often surprises sponsors. A target that "doesn't own any VMware" because a provider hosts its servers can still face a forced move if that provider's VMware rights end.
The 100-day plan should turn the diligence answers into a decision with an owner. These are the steps we put in it.
Waiting is a decision too, and it has dates attached. The table lists the ones that affect most portfolio companies, as of October 2026.
| Date | What happens | Who it affects |
|---|---|---|
| 31 October 2026 | Licence-included pay-as-you-go AVS deployments must move to portable VCF to stay compliant | Companies already on AVS |
| 12 January 2027 | Windows Server 2016 extended support ends | Any estate with Windows Server 2016 guests |
| March 2027 | Partners Broadcom dropped from its cloud programme may not run VMware-based clouds | Companies whose servers sit with a dropped provider |
| 8 July 2027 | SQL Server 2014 ESUs end | Estates still running SQL Server 2014 |
| 30 August 2027 | Licence-included AVS reservations must be exchanged for VCF BYOL reservations, or the workloads move off AVS | Companies with AVS reserved instances |
| 11 October 2027 | vSphere 8 reaches end of general support | Every on-premises vSphere 8 estate |
The vSphere 8 date is the one that catches the most companies. vSAN 8.x, NSX 4.x, VCF 5.2.x, Aria 8.18.x and HCX 4.x also reach end of service on 11 October 2027. Broadcom gives no technical support and no new patches after that date, and it recommends moving to VCF 9 or VVF 9. A company that has not left VMware by then faces an upgrade on Broadcom's current terms, under time pressure, which is the weakest negotiating position available.
AVS carries a compliance risk of its own. Microsoft reports BYOL registrations and associated customer data to Broadcom monthly, and it may suspend over-deployed or unregistered private clouds. A portfolio company on AVS should check its core count against its VCF subscription now.
Some sponsors hope regulators will change the picture. CISPE filed an antitrust complaint with the European Commission on 19 March 2026 about the end of the partner programme in Europe, and said on 14 May 2026 that the Commission's investigation is ongoing. Broadcom said it "strongly disagrees with the allegations by CISPE". We have found no Commission decision on CISPE's request for interim measures. A hold period should not depend on the outcome.
Our VMware exit service gives the board a route for each workload and a cost model against the Broadcom renewal, with the deadlines that apply to the estate. The same assessment becomes the playbook for each acquisition in a buy-and-build group.
Our VMware exit assessment gives the board a route for every workload and a cost model against the Broadcom renewal, dated against the deadlines that apply to your estate.
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