Q: Hi, What are your thoughts on Constellation's plans to start looking to buy Canadian VC- backed companies, as per following NR. Thank You
https://www.theglobeandmail.com/business/article-constellation-software-looks-to-experiment-by-buying-canadian-vc/
https://www.theglobeandmail.com/business/article-constellation-software-looks-to-experiment-by-buying-canadian-vc/
5i Research Answer:
We are comfortable with the plan; CSU is expanding its range of acquisition opportunities. VC companies as noted in the article often burn through cash while growing, and then sometimes cannot continue to get capital. The strategy expands CSU's acquisition universe. It may not be hugely material to the company, but there is certainly a chance it gets a 'gem' it might have otherwise missed. Since CSU has already acquired more than 1,000 companies, we do not doubt its ability to buy. We will need to see how the strategy progresses, but for now we would call it a mild overall positive for the company.