Benefits of Being Acquired by Perseus

Business operators speak about their post-acquisition experience

– Daniel Gold

Perseus is an operating group of Constellation Software Inc. (TSX:CSU). We are a strategic software acquirer with 25 years of expertise in acquiring and operating software businesses. Daniel Gold is an M&A Associate with Perseus.

Working from home has caused us to disconnect from the day-to-day personal interactions of the office and has in turn forced us to expand and explore our virtual networks in order to connect with others. In my case, I used this opportunity to connect with numerous business owners and managers who stayed on with Perseus post-acquisition. These business leaders range from Business Unit Managers to Portfolio Managers, all of whom have utilized the Constellation framework to continue to nurture and grow their respective businesses.

For Steven Greenwood, who was at the time of acquisition President of Magstar and whose business partner was in the process of retiring, Perseus proved to be the ideal acquirer to move forward with. Initially concerned about the process, eight years later Greenwood maintains Perseus kept their end of the bargain.

“Perseus had the philosophy of buying companies that are entrepreneurial, allowing me to continue to be an entrepreneur even after the acquisition.”

Moreover, Greenwood cites becoming part of a public company as a key factor in helping assuage the concerns of their customers about the longevity of their business, enabling Magstar to continue growing and win larger customers than ever before, even eight years after being acquired. Like Greenwood, Randy McIntyre of DIS references his ability to invest money in R&D to better equip his company to stay relevant in a highly competitive and differentiated marketplace. According to McIntyre,

“Two years after being acquired, we are better off financially, as well as a more dynamic company; we are stronger in R&D, with a great, cutting edge product… What I am doing with Perseus is what I always wanted to do – it is fun to win.”

This sentiment was echoed by Stephen Ryczek, who has seen an incredible turn around in Mortgage Builder in the year since its acquisition.

“We went from being a money losing business to profitable within a year.”

Ryczek now has his sights set on growing Constellation Mortgage Solutions through the access to capital provided by Perseus. While Greenwood, McIntyre and Ryczek have continued to successfully manage their businesses with Perseus, others have grown their presence in their respective vertical markets by making new acquisitions. Paul Benson, who was “the sales guy” at QMS, has gone on to found Constellation Kidney Group through the acquisition of five additional businesses in the dialysis software space. This has in turn expanded the Kidney Group’s geographical footprint from the US into the UK, Canada, Australia and NZ.

No one better exemplifies the acquisitive nature of business management with Perseus than Scott Smith, who joined with the acquisition of Market Leader in 2017 and has since been involved in nine acquisitions under the moniker Constellation Real Estate Group. When deciding who to sell to, Smith references his personal experience with Dexter Salna, President of Perseus.

“Perseus was diligent and persistent, and Dexter wanted me to stay on to run the business,” recalls Smith.

Being acquired by Perseus allowed Smith to focus on running a SaaS business again, having been a carve out of a larger entity whose focus was not primarily in software. What all managers of businesses under Perseus seem to have in common is a belief that our best practices have been a key determinant in the success of their businesses. According to Greenwood, this meant having the support to make tough, business critical decisions.

“Transition is hard, but the best practices of Perseus made us a stronger, more viable and profitable business.”

Like Greenwood, Benson considers these best practices a “keystone” of his business. Cha Loh, the portfolio manager of Constellation Finance Systems, claims the discipline that Perseus brought to the table helped take his business to the next level. Under Loh’s guidance, Perseus grew its financial systems portfolio by making four additional acquisitions. Having originally planned to leave after a six-month transition period, Loh continues to be a strong presence at Perseus twelve years later.

“I am continuing to have a lot of fun; we are striving to continue to grow and always look to do a little bit better.”

It was a compelling experience to meet with these business leaders, and it gave me a strong appreciation for the diversity and strength of our business management team. Having seen so many success stories has given me an immense sense of pride in working for Perseus to source new businesses interested in joining us going forward. What is clear from my discussions with this talented group of managers is that they continue to remain forward looking and optimistic. During these challenging times, the security offered by being a Perseus portfolio company has given each business the opportunity to continue to focus on business critical work initiatives, such as product development and growth strategy.

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