The Software program Billionaire who Bought 500 Firms and offered non
The story of Mark Leonard and Constellation Software program is one which ought to be on each entrepreneur’s radar. With its unimaginable development and distinctive enterprise mannequin, Constellation Software program is a big firm immediately. And but, it is possible that many individuals have by no means heard of it or its founder.
The corporate was based by Mark Leonard, a former enterprise capitalist, in 1996. Mark’s journey to constructing Constellation Software program started with a realization throughout his 11 years in enterprise capital: he needed to construct one thing everlasting. So, he created an organization that might purchase and maintain vertical software program companies without end. This was the beginning of Constellation Software program. It went public in 2006,and now has 25,000 staff at present.
Since its debut at $70M on the Toronto Inventory Change, Constellation Software program has elevated in worth by round 70,000%, making it at present valued at round $49B. And Mark Leonard is the driving pressure behind the corporate’s continued success.
The corporate’s objective is easy: to grow to be the very best purchaser of vertical software program companies on the earth. Vertical software program corporations goal particular markets, like hospital administration, and have excessive gross margins. Constellation Software program likes to accumulate small VMS corporations, normally for round $2-5M, and has acquired 500+ vertical software program corporations throughout 75 industries since its inception.
So, how does Constellation Software program handle 500+ corporations? The corporate splits them into six working teams, with every group having a director liable for serving to the businesses in that group succeed. The corporate additionally has three cultural tenets that govern its operations: autonomy, long-term considering, and meritocracy.
One of the crucial distinctive facets of Constellation Software program is its long-term considering. The corporate would not wish to promote the businesses it acquires for a revenue. It desires to accumulate them and maintain them long run. Since inception, Constellation has solely offered one enterprise as a result of they have been supplied a extremely excessive worth in its early days. Mark Leonard regrets promoting that agency to this present day.
Mark additionally believes in taking good care of his staff, providing good pay, inventory bonuses, and a transparent path to maneuver up. By 2015, greater than 100 Constellation Software program staff have been millionaires! And Mark desires to make 500 extra within the subsequent 10 years.
Immediately, Constellation Software program generates a free money stream of round $1B on $6.5B in revenues with free money stream margins of 20%. The issue for Mark and Constellation now could be good utilization of that cash. They’re taking a look at extending the mannequin and shopping for larger corporations, increasing outdoors the vertical SaaS market.
Mark Leonard and Constellation Software program symbolize a software program behemoth by means of good acquisitions and a killer money stream cycle. With their development bets now, it will likely be thrilling to see what Constellation Software program does subsequent.