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How does Constellation Software operate?
Very interesting Constellation Software expert call. Discusses some things around the "M&A machine" and Lumine, which is expected to start trading next week.
(You can read the full call using this link, there's a two-week free trial and no need to enter payment information of any kind.)
Some highlights below:
"Reached out directly to Mark Leonard. I sent him an email, said "You've prescribed this thesis. If you're looking for companies like this, here's how I fit the mold."
He replied back to me in 24 hours, sent me on to his M&A guy at Constellation named Shahzad."
"Aren't you going to just walk me out the door just like normal M&A happens here?"
"In their massive Salesforce instance, where they're tracking all companies and activity and reach outs for M&A activity, we weren't in there. We were the anomaly."
Companies are allocated based on who touched them last:
Decentralization taken to the extreme:
"If you want to have a purely financial services slant and build a portfolio of companies within Lumine so that you're going to manage, you could do that"
Most of the profit in telecom and therefore in Lumine is found in the service agreements:
And Lumine has high switching costs:
"Once you're entrenched in a telco, it's a large project in order to pull something out to replace it."
Constellation sometimes follows the Transdigm model:
Price increases were "mandatory", but it was up to the BU leaders to decide how much the market could withstand:
(You can read the full call using this link, there's a two-week free trial and no need to enter payment information of any kind.)
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