The company's business strategy is to acquire software startups, and then hold them for the long term. It has acquired over 260 startups since being founded. It focuses on vertical market software companies. Most of its acquisitions are relatively small, although the company has indicated that it may pursue larger acquisitions in the future. For instance, Constellation acquired Acceo Solutions for $250 million in January 2018, the second-largest acquisition in its history. Although the company has experienced great success with this strategy in the past, it has experienced more competition in acquiring companies in recent years, especially from private equity and hedge funds. As of 2016, 67% of revenue was from customers in the public sector, while the other 33% was from customers in the private sector. 12% of revenue was from Canada, 52% from the US, 30% from Europe, and 5% from the rest of the world.
Operating Segments
Constellation Software has six operating segments:
Volaris Group: focuses on acquiring software businesses serving various areas, including agri-business, financial services, and education. It has approximately 45 constituent software businesses.
Harris Computer Systems: primarily serves the public sector, including utilities, education, and healthcare. It has 31 constituent businesses.
Jonas Software: operates 70 companies, primarily in the hospitality and construction sectors.
Vela Software: operates 8 divisions, primarily focuses on the industrial sector, including oil and gas and manufacturing
Perseus Operating Group: operates in a variety of industries, including home building, pulp and paper, and real estate
Total Specific Solutions: focuses on software companies in the UK and Europe. Total was acquired in December 2013 for $360 million.
Controversy
In 2016, the founder of Innoprise Software sued Harris Computer Systems for giving away its software for free, thus reducing the value of a revenue-sharing agreement. The founder and chairman of Constellation Software, Mark Leonard, has maintained a low profile, declining media interviews and making few public appearances. In mid-2018, the company cancelled its quarterly earnings calls, a highly unusual step for a public company. Analysts suggest the company took this step because it was worried about leaking information about potential acquisitions to its competitors.
