Your Tech Story

Constellation Software

Constellation Software – A Multinational Conglomerate That Acquires And Builds Software Companies.

Constellation Software is a Canadian-based diversified software company. The headquarters of the company is based in Toronto, Ontario. In 1996, a former venture capitalist, Mark Leonard founded Constellation Software Inc. The main idea of the company is to buy exceptional and good businesses in their respective verticals based on a few criteria. After the acquisition, CSI studies the history of the company to help it grow and become the number one player in the market. It helps the good businesses become exceptional and the exceptional businesses have consistent growth and profitability.

About Constellation Software

Founded in 1996, CSI is a public traded company and is listed on the Toronto Stock Exchange. The company went public in 2006 and it is also a constituent of the S&P/TSX 60. Currently, CSI has 6 operating segments and the company server globally with 16,000 employees. The annual revenue of the company is over $3 billion. CSI acquires companies in various fields ranging from software businesses to construction companies.

Acquisition Criteria of CSI

The companies that are selling their business units or the entire company to CSI can be due to various reasons. Maybe the companies find a new interest in a different sector or reasons of health, estate planning, etc. But, the main idea of CSI is to hold the status of an exceptional company and run it following its past. And, in case of a good company that CSI acquires it tries to understand the factors which have hindered it from becoming an exceptional company.

Constellation Software
Image source: globenewswire.com

Business Strategy

The main target of the company is to acquire as many good and exceptional companies as possible and hold them back for a long time. CSI was founded in 1996 and since then it has acquired around 500 companies. CSI focuses on a lot of sectors for acquiring the top market players from each sector. It has its main interest in vertical market software companies that create industry-focused software. Depending on the history of the company, past growth, profitability, and acquisitions, CSI takes a decision. It also buys companies that haven’t made significant growth but show huge potential.

The business strategy of CSI has proved to be very impactful for the growth of the company. The value of its stocks has increased to 30 folds since it filed IPO. Most of the acquisitions of CSI are small, i.e., ranging below $5 million. One of the biggest acquisitions in the history of CSI was acquiring Acceo Solutions in January 2018. The deal was closed at $250 million. In recent years, CSI experiences very tough competition in acquiring companies. The main competitors in the market are private equity and hedge funds. CSI generates most of its revenue from the US (52%) followed by Europe and Canada.

Operations Of Constellation Software

There are six operating segments of CSI. The first segment is Volaris Group which focuses on buying software businesses in various sectors (finance, education, agriculture, etc). The second is Harris Computer Systems which mainly focuses on serving the public sectors and it includes utilities, education, and healthcare. The third one is for the hospitality and construction sector and it is called Jonas Software. Under this segment, CSI has 70 companies. The fourth segment is Vela Software which focuses on the industrial sector and especially on oil and gas manufacturing companies. Perseus Operating Group is the fifth segment and it focuses on pulp and paper business and real estate. Last but not least is the Total Specific Solutions which focuses on the UK and Europe-based software companies.

About Mark Leonard Constellation Software

Mark Leonard is a billionaire and an entrepreneur who started CSI in 1995. He is currently President and Chairman of the Board in CSI. Mark went to the University of Guelph and the University of Western Ontario. Before becoming a venture capitalist, Mark worked as a bounder, mason, wind energy researcher, and some other jobs.

Leave a Comment

Your email address will not be published. Required fields are marked *