in business strategy, Constellation Software, M&A, Mark Leonard, Product Management, shareholder, software, vertical market software

Mark Leonard does it again…

Long-time readers would know that I’ve been a fan of Mark H. Leonard from Constellation Software.

In a recent company’s shareholder Q&A, in classic Constellation software fashion, Mr. Leonard does it again by cutting through the noise as he leans into management advice for running (software) companies…

“If we are buying a business that is performing poorly… that has higher than industry average customer turnover and/or high employee turnover, then we are likely to have to intervene in some fashion. That could be as benign as coaching or as draconian as changing management. We don’t keep a slew of competent managers at CSI sitting on the bench waiting for their next gig, so we’re going to look very hard amongst the ranks of the newly acquired company. We want managers that know the vertical and can be coached. Existing employees are usually our best bet.

I suspect we are willing to be more patient with both existing and new managers than other software company buyers. We are permanent owners. We don’t need to find the reincarnation of Peter Drucker on roller skates to whip the newly acquired business into shape, so it can be flipped to the next buyer.

This largely dodges your question about management attributes. I despair of answers that are some version of “intelligent, energetic, ethical”. I know some great business builders who didn’t win the genetic lottery in the intelligence category but compensated with hard work and determination. Energy can be poorly channeled. Ethics seem to get pretty plastic under enough carrot and stick stress. I’d rather use a track record of consistently happy and loyal customers and employees to judge a team. That strikes me as a far better predictor of future performance than psychometric questionnaires or dowsing for cultural fit.”

Mark Leonard, Constellation Software, Shareholder Q&A – Sept 17, 2021