Power, land, and permits
Access to electricity is often the most valuable and most constrained asset. Diligence looks at utility service agreements, interconnection commitments, planned capacity upgrades, and whether the site's power supply can actually grow with demand. Land rights matter too, including ground leases, easements, and zoning approvals for expansion. Backup generators and cooling systems can raise air and water permitting questions, and local opposition to new projects has become more common in some areas. State and local tax incentives tied to investment or employment commitments may carry clawback provisions that a buyer inherits.
Customer contracts and operational risk
Revenue in data center mergers and acquisitions depends on customer agreements, which can range from colocation contracts with many smaller customers to long-term leases with a few large technology companies. Those agreements should be reviewed for service level commitments, credits and termination rights tied to outages, assignment and change-of-control clauses, and renewal options. Security and incident history matter, along with any certifications or audits that customers rely on. If a foreign buyer is involved, the federal national security review of foreign investment may apply, particularly where a facility serves sensitive customers or forms part of critical infrastructure.
Structuring the deal
These transactions may involve a single facility, a development pipeline, an operating company, or a joint venture with an infrastructure investor. Structure affects how permits and utility agreements transfer, which consents are needed, and how construction risk on unfinished sites is allocated. We review the key agreements early to identify the consents and approvals on the critical path, and we work alongside technical and environmental consultants on the physical side. Purchase agreements in this sector often need tailored conditions and covenants around utility approvals, construction milestones, and customer consents, since a standard form rarely addresses them. Bring the site list, the principal customer and utility contracts, permits, and any letters of intent or term sheets.
