Benefits of Being Acquired by Perseus Group

Perseus Group is an operating group of Constellation Software Inc. (TSX:CSU). We are a strategic software acquirer with over two decades of expertise in acquiring and operating vertical market software businesses.

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 to connect with others. In our case, we used this opportunity to connect with numerous business owners and managers who stayed with Perseus Group post-acquisition. These business leaders range from Business Unit Managers to Portfolio Managers, all of whom have utilized the Constellation Software 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 Group proved to be the ideal acquirer to move forward with. Initially concerned about the process, eight years later Greenwood maintains Perseus Group kept their end of the bargain.

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

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.
“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 Group is what I always wanted to do – it is fun to win,” according to McIntyre.

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

“We went from being a money-losing business to profitable within a year,” said Ryczek.

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 Group, 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 Constellation Kidney Group’s geographical footprint from the US into the UK, Canada, Australia, and New Zealand.

No one better exemplifies the acquisitive nature of business management with Perseus Group than Scott Smith, who joined via 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 Group allowed Smith to focus on running a SaaS business again, having been a carve-out of a larger entity whose focus was not primarily on software. What most, if not all, business unit managers under Perseus Group seem to have in common is a belief that our best practices have been a primary 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,” said Greenwood.

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 Group 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 Group twelve years later.

Loh remarks, “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 hear from these business leaders, and it gave us a strong appreciation for the diversity and strength of our business management team. What is clear from the 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 Group portfolio company has allowed each business to continue to focus on business-critical work initiatives, such as product development and growth strategy.