As a serial purchaser concentrated on the VMS segment - "vertical market software", i.e. software specialized for a particular trade or sector, generally custom designed by small teams of developers - Constellation has delivered a dazzling value creation over the last two decades.

The secret of this success stems largely from the inspiration Mark Leonard drew from Berkshire Hathaway. We find the same ingredients there: a low-cost acquisition strategy, a holding company cost structure reduced to the strict minimum, perfect alignment of interests between managers and shareholders, etc.

Organic growth is historically low, even negative, but it is on external growth that Constellation impresses: over the last fifteen years, after having already reached a certain critical mass, the group has managed to increase its cash profits - or "free cash flows" - at an annual average of 25%.

This has been achieved without debt or capital increase, but simply by reinvesting its cash flows. Completely self-financed, the performance is therefore spectacular and no other comparable company comes to mind, including other successful serial acquirers such as Descartes, Vitec or Roper Technologies.

Fiscal year 2022 remains true to this spotless track record, with revenues up 30%. $1.9 billion was invested in acquisitions, including deferred payments, to add $1.5 billion in revenue, representing an acquisition multiple of x1.2 revenue - in a market where we frequently see software companies trading between x10 and x20 revenue.

In relation to Constellation's historical net margin profile, this $1.5 billion of additional revenue should translate into an additional cash profit of between $300 and $350 million: we are therefore orbiting around very satisfactory returns on investment in the 15%-20% range.

It should be noted, however, that for the first time in its history, consolidated cash profit is down on the previous year. There are two reasons for this: a working capital effect - about which management has no concerns - and an exceptional gain last year, linked to the conversion of Topicus preference shares.

Fiscal year 2023 will see Constellation evolve with a significantly different scope following the two spin-offs of Topicus - the conglomerate's bridgehead in Europe, where it intends to replicate its profitable external growth strategy in a fragmented market - and Lumine a few days ago.