Constellation Software Inc. (CSU) Earnings Call Transcript & Summary

Hello, and welcome to the Annual Meeting of Shareholders of Constellation Software Inc. Please note that today's meeting is being recorded. If you participate in today's meeting and disclose personal information, you will be deemed to consent to the recording, transfer and use of same. If you disclose personal information of another person in today's meeting, you'll be deemed to represent and warrant to Computershare and the corporation that you first obtain all required consents for the disclosure, recording, transfer and use of such personal information from all appropriate persons before your disclosure. [Operator Instructions] It is now my pleasure to turn today's meeting over to Mark Dennison, Chairman of the Annual General Meeting of Constellation Software Inc. Mr. Dennison, the floor is yours.

My name is Mark Dennison. I'm the General Counsel and the Corporate Secretary for Constellation Software. Mark Leonard, Constellation's President; and John Billowits, Constellation's Chair of the Board have asked me to act as the Chair of today's meeting. Jim Albeck will act as Secretary of the meeting. I ask Shirley Tom and Krish Sino of Computershare to act as scrutineers and to compute the votes of any polls taken at this meeting. We are conducting today's meeting virtually via a live webcast. Since the meeting is being held virtually, we want to outline a few logistical items regarding the conduct of this meeting. As indicated in our press release dated April 3, 2023, shareholders of Topicus and shareholders of the company have had the opportunity to submit questions in advance of today's meeting. We have received a large number of questions. On behalf of the shareholders, our panel of questioners has collated the questions received and organized them by theme. And following the formal part of this meeting, our panel will pose those questions to our senior managers during the Q&A session of the meeting. Additional questions can also be submitted by any meeting attendee using the instant messaging service of the virtual interface. Questions which are already addressed and the questions submitted in advance of the meeting or that are redundant or competitive will not be answered. Any questions regarding procedural matters are directly related to the motions before the meeting may be addressed during the formal part of this meeting. When asking questions, please indicate your name, which entity you represent, if any, and if applicable, confirm if you are a registered shareholder or a duly appointed proxy holder. For each question that we answer we will summarize the question and read out loud the name of the person who asked that question, and if applicable, the entity such a person represents. For the purposes of the meeting today, voting on all matters will be conducted by an electronic ballot. Registered shareholders and duly appointed proxy holders will be asked to vote on each business item after the presentation of all of the business items. If you have not voted in advance of the meeting, you will be able to do so by choosing the vote option on the virtual interface. When voting commences, the polls will be open for 3 minutes. We will now proceed with the formal portion of today's meeting. To expedite the formal part of the meeting, I will move and second all of the motions. The secretary of the meeting is filed with me proof of mailing of the meeting materials, including the notice of availability of proxy materials in the form of proxy, and we're applicable at the notice of meeting and the Management Information Circular. Copies of these materials are also available on the company's SEDAR profile and on the company's website. We would be pleased to deal with any questions concerning the financial statements subsequent to the completion of the formal part of this meeting. The scrutineers have reported to me that we have at least 2 shareholders present by electronic means and holding or representing by proxy at least 15% of the votes entitled to be cast at this meeting. As such, I declare that a quorum is present for the conduct of business, and this meeting is properly constituted for the transaction of business. Voting today will be conducted by electronic ballot. The balloting will be open to registered shareholders and appointed proxy holders who are properly logged in with their control numbers or their invite code after the presentation of all of the business items. The first item of business is the election of the directors. There are 13 directors to be elected at this meeting. The management information circular made available to shareholders contains information about the 13 nominees. Those nominees are Jeff Bender, John Billowits, Susan Gayner, Claire Kennedy, Robert Kittel, Mark Leonard, Mark Miller, Lori O'Neill, Donna Parr, Andrew Pater, Laurie Schultz, Barry Symons and Robin Van Poelje. The meeting is open for nominations for the election of directors for the ensuing year or until their successors are elected or appointed. I will now nominate the directors and I second the nominations. I nominate each of the persons whose name appears in the management information circular under the heading Election of Directors to be a director of the company until the close of the next Annual Meeting of Shareholders or until their successors are appointed, and I also second the nominations. If there are no further nominations, I declare the nominations closed. I note that, as described more fully in the management information circular, the company adopted a majority director election policy in May 2009. This policy enables shareholders to vote separately for each director nominee at meetings of shareholders where directors are to be elected. If a director nominee does not receive the support of a majority of the votes cast at a meeting of shareholders, that director will be expected to tender his or her resignation from the Board following such meeting. The resignation will be effective upon acceptance by the Board and will be disclosed via press release. For more information about our majority director election policy, please see Page 21 of the management information circular. I will now move and second a resolution appointing the auditors for the current year and authorizing the directors to fix their remuneration. I move that KPMG LLP chartered accountants are appointed auditors of the company to hold the office until the close of the next Annual Meeting of Shareholders or until their successors are appointed at such remuneration as may be fixed by the directors and that the directors are authorized to fix such remuneration, and I also second the motion. Unless there are any questions, I will move to the next item of business. The next item of business is an advisory resolution to endorse the company's approach to executive compensation as further set out in the management information circular. As the vote is advisory only, it will not be binding on the company. However, the Compensation Nominating and Human Resources Committee of the Board will take into account the results when considering future executive compensation arrangements. I will now move and second the approval of the advisory resolution. I move that it be resolved on an advisory basis and not to diminish the role and responsibilities of the Board of Directors of the company that the approach to executive compensation disclosed in the management information circular is accepted, and I also second the motion. Unless there are any questions, I will move on to the voting process. As mentioned earlier, voting today will be conducted by electronic ballot. I'll now take a moment to ask that the balloting be opened to registered holders and appointed proxy holders. The polls are now open. And at this point, all registered holders and appointed proxy holders, who are properly logged in with their control numbers or their invite code and who wish to vote, will be able to see on the screen, the election of directors, the appointment of the auditors and the advisory resolution on executive compensation motions, which have been brought forward at this meeting. Please register your votes by accessing the voting page and selecting the for or withhold buttons next to the name of each proposed director and next to the resolution with respect to the appointment of KPMG as the company's auditors. Place select the for or against button next to the advisory resolution on executive compensation. The voting will be open for 3 minutes. And while you are submitting your votes, we will begin introducing the speakers for the question-and-answer period. Once the electronic balloting closes, the voting page will disappear, and your votes will be automatically submitted. The full voting results will be published on SEDAR following the meeting, but I can report that based on the proxies received in advance of the meeting, all matters that were put to a vote today have passed. The formal items of business as set out in the notice of meeting have now been dealt with. I move that the meeting be terminated, and I second the motion. I declare the resolution carried and the meeting terminated. The formal agenda for this meeting is now completed. I will now turn the meeting over to Larry Cunningham, who will be leading the question-and-answer session this morning. I ask that all attendees who would like to ask a question to use the instant messaging feature of the virtual interface to do so. When asking your question, please include your name, the entity you represent, if any, and if applicable, confirm if you are a registered shareholder or a duly appointed proxy holder. Over to you, Larry.

Thank you very much, Mark Dennison. I appreciate your very clear instructions and overview of the meeting, and welcome to Constellation Shareholders. We have a very large crowd about 450 so far, and that number usually rises. So it's nice to have everyone together. Within that group are included the directors and officers and panelists who will be answering your questions today. And before we dive into the questions, we'd like you to be introduced to the panel, who will be answering your questions. For that purpose of making introductions. I'd like to ask John Billowits, the Chairman of the Board to introduce everyone. John?

Thanks, Larry. Contrary to prior years, we're just going to do an intro and we're not going to ask the panelists to provide any embarrassing facts in their bio. If you participated in prior years, you recognize all the panelists, except for maybe one or two because they've been with CSI for well over a couple of decades. I'll skip Mark Dennison because he did the introduction for the meeting. And I'm simply going to introduce people as I see them on my screen. So there's no particular order to the introduction. First is Jamal Baksh, who serves as CFO of Constellation Software at the head office; next is Mark Miller, who serves as CEO of Volaris; and we have Barry Symons, who is the CEO of Jonas Software; we have Will Pan and Howard Leung, who will act as moderators today, and I'll let them provide a short bio before they ask any of their first questions; Daniel Zinman, who is co-CEO of Perseus Operating Group; we have Robin Van Poelje dialing in from Amsterdam, who is the CEO of Topicus; We have David Neylan, who's the CEO of Lumine, I'm sure David will get some questions today. [Bernie Anzarouth] all of you will know who's been here for, I guess, employee #2, is a CIO, Chief Investment Officer of Constellation Software; we have Dexter Salna, who is the co-CEO of Perseus; Jeff Bender, who is the CEO of Harris Computer Systems; Mark Leonard, who everyone knows, is the President and Founder of Constellation; and Damian McKay, who is the CEO of Vela. I think I caught everyone, Larry, so I'll pass it back to you.

Thank you very much, John. I think so, too, and thanks for noting that Will and Howard are joining us. I'd like to reintroduce them to this group. They are joining us now for the fourth year of moderating Constellation Q&A. Howard was an equity research analyst at Veritas from 2016 to 2022 covering Constellation. And last year, he moved over to his current position at Fiera, and his team has been a shareholder of Constellation for nearly 10 years. Will Pan has been an analyst with Ruane, Cunniff for 13 years and a shareholder of Constellation since 2014. I joined the Constellation Board in 2017, became Vice Chairman of the Board in 2019, and I've been a shareholder about that time. To repeat a little bit of what Mark Dennison said, because I know a lot of people joined after he outlined the structure of the meeting. We received a record number of questions from you this year from a diverse group of shareholders. And we've edited those questions, trimmed them and condensed and consolidated them to avoid asking duplicative questions and we've edited for style and efficiency, really, we want to deliver substantive answers, and we'll try to get to all the questions. We've designed it to enable that. We have done some in the past, but we can't guarantee it. Also, if you put in a question, you hear one that runs with it, but isn't written exactly the same way attributed to our effort to get to the substance and get the questions answered in the most useful way. Because of the volume of questions when we were pressed to try to trim, we may skip questions that were asked last year in the interest of time. Ideally, we can get to all of them, but if we had to cut some, it will be questions that were just asked last year, where we don't think things have changed. As Mark Dennison said, as in previous years, you can use the Q&A function, and we'll consult that throughout the meeting questions in. We have not shared -- as in past years, we have not shared any of the questions with the panelists, except a half dozen or so that require homework, computational numerical information that we sent to Jamal ahead of time. We collated the questions into nine categories. So we'll have nine rounds of questions, three posed by Will, three by Howard, three by me, taking turns. Those topics are first up operations internal and external. Will will start with the internal, Howard will go to the -- I'm sorry, Will will start with the external, Will will go with the internal. Next up will be spinoffs, which I'll lead and large acquisitions, which Will will lead, then we'll turn to financials that Howard will do, followed by two segments on M&A, the M&A environment, which I'll handle and M&A process, which Will will handle. And second to last will be governance, led by Howard and we'll close off with learning that I'll lead. So welcome again, everybody. Let's start this morning's questions with Will Pan on operations external.

Thanks, Larry. It's an honor to participate in the meeting again this year. I look forward to learning a lot as always. This first set of questions is about operations, particularly with respect to external stakeholders in the external environment. The first one just to lead off is how does Constellation or perhaps really the groups or business units think about and/or track customer satisfaction?

I can start, if you want. The -- our preferred metric is NPS, Net Promoter Score. So we typically would encourage our business units to be the ones who would obviously go out and do it. I would say, we use some quarterly tracking where I would review -- the other senior executives will review the NPS scores by business unit. We don't really look to calculate at Harris overall score. I don't think that's super meaningful now running over 100 business units. But basically, we sort of push it down to the business unit. And actually, our preference will be actually at the product line level within a business unit. So again, different groups measure it differently. So I measure it sort of quarterly, some measure it annually. But I would say our most preferred metric is using NPS.

[indiscernible] answer. And does anybody else want to chime in?

I can throw in -- I was just going to say, really, we really leave it up to the business units to measure that. They have different -- each of those sort of different perspectives on that. And if you're going to enterprise customers, for example, you need to talk to many, many people inside that organization versus what you're selling to point solutions, potentially you're just sort of talking to one individual. So it varies by business unit. We don't have any overall Volaris per se way of tracking customer satisfaction.

Great. A somewhat related question is, how should we assess the durability of individual business units? Mark Leonard shared in past letters that the average customer relationship was about 25 years. This is a live question. Is that the best indicator, the average customer relationship? How do people think about that?

This is Dexter. And it varies by customer type, the bigger and software type. And so obviously, the bigger customers are more stable and stay longer. When you're selling to real estate agents or individuals, you tend to get a lot shorter customer life span, but you also have more customers that you can get, but there's a larger churn in those. But typically, if you have a mission-critical back-office software and you treat your customers well, you'll have them forever. In fact, I started out with Volaris in the first acquisition. And I imagine that those -- some of those companies that were there that I had negotiated contracts with some 28, 30 years ago are probably are likely still customers.

Great. Some investors fear the obsolescence of your products that they're being bypassed by a fancier new software. Most of your companies were created more than 20 years ago. Could you give us a technical or a semi-technical description of how the technology stack of your acquisitions has evolved over time, going from technology from perhaps the 1980s in some instances to something built now probably on average around 2015? And how do they stack up against the competition technology wise?

It's Barry Symons. I can start with that. Obviously, it's all over the map, and we have within Jonas 130-something business units and some of them are on very modern technologies that were built in the last couple of years. Others were built many years ago. I think what we really need to focus on is the attrition rates in the individual business units and the competitive landscape in the individual business units because in vertical market software, every vertical is different, and you have to be competitive in the vertical that you're in. And in some verticals, it's hypercompetitive. In other verticals, it's less competitive. And some of the deep enterprise software type products that we have where it's very ERP-ish and covers all kinds of aspects of the customer, the features and the functions and the way it interacts is sometimes more important than the technology it's written in. So it really is all over the map, but I think you really just need to focus on each individual vertical and make sure that you're competitive in that vertical. And that's the best way I can describe it.

Anybody else on that one, how they technology stacks of the various individual units may have evolved over time?

I'll just throw -- this is Mark Miller. I'll just throw in that one of the things, our better businesses are doing is even if they have an older platform, they're slowly renovating that platform over time. As was suggested earlier, we have these customers for a long time in some of our verticals, and it allows you to slowly plot away at that. So you can sort of evolve the product over time to accommodate technology as it changes. It usually doesn't happen overnight. So it's really just a question of slowly marching along like a turtle and keeping enhancing and evolving that particular technology over a long period of time.

That dovetails with our next question, which is how should we think about...

Maybe I could interject and talk about one of the Board processes we have implicit in that last question was the concern that we get blindsided by new technology that we won't see it coming in. What we do each quarter is we profile a venture-backed vertical market software company that has done well. And through that process, we can get a sense of how they penetrate markets, what the economics of what they're doing are, what underlying technologies they're using and the advantages they have versus their incumbents. And I think we've done 8, 9 of those so far that we do want -- We're doing AppFolio, for instance, this quarter, which is stunningly attractive property management software company that penetrated a relatively mature market and did so in a very economic fashion. So we're not blind to technology or to new approaches and we try to learn from them.

Great. A similar question is how we should think about your R&D budget and how much you spend on maintaining products like Mark Miller was saying and versus innovation? The R&D process evolves, you apply new technologies, new best practices, but R&D as a percentage of sales has been stable at around 14% since the IPO. Why is this the optimal number?

I could comment on that one -- Mark Miller. I just -- I would suggest that when I look at that across our businesses, I really don't extrapolate much from that number. I mean it can vary. You can have a very lower -- you can have a lower percentage and actually have a much better R&D group and better associated organic growth with what that business is doing than some that have a larger percentage of R&D. So I don't find that number particularly useful, but I'll leave that to others to comment on. So looking at the consolidated one, across all of our businesses isn't helpful at all to me. I'd like to look at it individually and see what's happening. It's usually a quality versus quantity thing when you're talking about R&D anyway.

This is Dexter. I just want to add to what Mark said. I think what happens, Will, is that once you -- when we went public, I forget how big we were, but the bigger you get, the law of large numbers, it averages out to the same thing. So I wouldn't be surprised if that stays the same forever.

And I really appreciate that you use the law of large numbers in the statistical sense. Next questions have to do with inflation. How is inflation impacting daily business operations in the past year and as of late?

Yes, Will, this is Robin speaking. So we clearly have inflation. And I think there is -- especially here from a European perspective, there's a huge difference per country. So there are countries with high rates of inflation. There are countries with lower rates of inflation. So you cannot draw a long single conclusion, that's one. And we think that inflation is something not caused by us. And in many of our contracts, we have clauses for it. So we translate it to our customers. And we need to do that because some of our suppliers do the same, and we have to pay our employees as well. So it's a balancing act, and it differs per country, a difference for each situation, but it's definitely something which was on the radar screen for coming up by last year.

Yes, Will, it's Jeff, I would say, I would agree with Robin, I think you see it sort of in a couple of different ways. You see it definitely in wages and compensation for employees, which obviously is the largest portion of our expense base. You also see it in travel costs. I think, as we're now sort of moving out of the pandemic and a lot of us are sort of back to much higher levels of travel, you definitely see it in that part of it. And I would say we've had some challenging negotiations with some of our larger tech suppliers, I think who are also looking to push through larger increases. So I would say those I'd say the three main areas where we see it. And I think the counter, as Robin spoke to, is really adjusting through our pricing to make sure that we understand the impact on our margins and make sure we're managing our margins going forward.

This next question is about pricing. You often use the phrase mission critical to describe your products and say they make up a small portion of customers' costs, the customers generally have low churn and use your products every day. But organic maintenance revenues in the past 2 years have grown less than cumulative inflation. So how do you reconcile the two? Perhaps you have less pricing power than the phrase mission critical might suggest?

This is Dexter again. And I would say it varies by business unit and by contracts. And sometimes, you'll have these very large customers that have contracts that limit the amount of increases. And also, it's the managers. Sometimes the managers are on the customer side and they don't want to give them an increase that equals or exceeds inflation, especially since we've gone through the last decade or more at kind of 2%, 2.5% inflation and to go and all of a sudden give your customer a 10% increase or 8% increase. It -- I think it's just a human thing that they don't want to do it. They just have -- I press a lot of my managers to at least keep up with inflation and try to limit also if they're not going asking the customer for more money, it's hard to justify to give your employees inflationary or extra inflationary increases. So I hope that answers the question.

Great. Moving along, the company disclosed a cybersecurity breach recently. Last year, it was mentioned that cybersecurity was an area that had to be more centralized than others. Despite your best efforts, what internal controls were missing and how do you deal with angry employees and/or customers that may have had their data compromised?

I could talk to -- that at Constellation, it's still a very decentralized organization from a cyber perspective. The one system that was impacted for the press release was a financial reporting drive or network that was at head office. We're still in the process of identifying all the impacted employees, et cetera, and we're in the process of notifying them. So there's not much more I can discuss what's on the -- in the press release. When you come to customers, et cetera, like again, each of the operating groups have their own cyber or controls, et cetera. So again, this was a limited impact on a financial report -- internal financial reporting system.

Yes, this is Robin. So I think cybersecurity has been definitely on our agenda over the last year. I think we made huge steps. We can help from an experts in this field. And as mentioned by Jamal, it's still decentralized. We share lots of learnings, and we're monitoring it very tightly. It's absolutely an important topic. But I think we still do this in the way we used to do it in our decentralized model, getting step-by-step more professional. It's a process its for companies we acquire and we onboard until the more mature companies we have. I think we're making progress there, but it never stops. You have to continue doing it because there are always new things popping up in the outside world. So it's a continuous process, and we spend lots of time on it.

Great. Last question in operations with respect to the external environment. Some IT-related companies and software companies are warning of slowing demand right now. Are the operating teams seeing reduced willingness of businesses to spend on IT? Any other feedback from the businesses on the current macroeconomic environment.

It's Barry. I can start with that, Will. I mean, obviously, again, unfortunately, it's business by business by business because there is no one overarching theme in any of our businesses. But so far, if I had to take an overarching staff, at least within the Jonas Group, we haven't seen a material decline in demand. And so -- but I can point to certain businesses within Jonas where, yes, it has happened, and I can point to other businesses where it's gone the other way. But I'd say, overarching, I wouldn't say there's been a material shift so far. We're keeping a very close eye on it. We're obviously very concerned and want to make sure that we're always watching what's going on, on the macro environment, but that's about the best I can do without going into each individual business.

Great. Howard, over to you.

Thanks, Will. Like Will, I'm also happy to ask questions again this year and learn from the panel again. My questions are also in operations, but more internally and even between groups. So the first question is open to the group, and it's more of a philosophical one to decentralization has many positives and it's part of the Constellation model. But in your experience, what are some of the negatives?

I can take that one, Howard, to start off with. I think the biggest challenge with decentralization is the leaders of the businesses have to be empowered to learn because you're -- you have high expectations for them to be constantly learning from each other and gathering best practices because we sort of lay them out there. And whereas you're in a centralized environment, you're more able to force speed people with specific processes and ways of doing things right through the system. So I'd say in a decentralized environment, there's a lot of requirements for people to find their own mentors and learn from each other. And I think that's one of the challenges because sometimes you'll see some leaders just take off, but they do really well and transfer that, those best practices into their businesses. Others -- others struggle, the ones who aren't willing to go out and absorb all that information, and that's hard for us to control when you have so many business units all around the world. So I'd say that would be my biggest concern from it. I love the -- obviously, the portfolio side of it, where you're really not -- you don't have any single points of failure, so but that's a positive. So...

Yes, Howard, if I was to add my two cents. I think I would say cooperation and collaboration sometimes amongst the groups and the businesses can be a bit challenging. So not that they don't want to work together. I think actually, in most cases, they do. But when you're looking to align priorities amongst differing businesses and you want those businesses to be accountable for their results, it's often quite challenging that my #1 would be the same as Mark's #1, right? So again, because we don't force them to do things, finding an equal #1 can often be challenging. So I think it can be frustrating sitting where I sit sometimes you see an opportunity that you think could do something, but it can be challenging to get those businesses to try and work together. So again, you persuade, you educate, you do those things. But fundamentally, we do leave those decisions up to the businesses. And I would say that, that to me is one of the downsides of our decentralized model.

Yes. Thanks for sharing that. And maybe this is a question related to the one about learning actually. Can you discuss how you cross-pollinate best practices across business units and verticals and maybe I'll start with Jeff since you started -- since you discussed it. And how do you or how do you encourage it? How do you encourage the groups to do that?

Yes. I think the best way I still think is more face-to-face communications and interactions amongst different leaders and employees. So I think, obviously, the pandemic slowed us down a little bit on that front. If I look at across the Harris organization, over the last quarter, there were, my gosh, quite a few in-person leadership meetings. And I would say the one underlying theme or foundation for all of these meetings is best practice sharing. I myself was over in the U.K. We have brought all of our U.K. employees, which for us is still relatively small, we had 350 people together. I think there were nine different business units. And then we basically built an agenda all based on best practice sharing. So again, the leaders from the businesses that we believe are executing and delivering on the best practice, then share that with all of the other attendees from all the other different businesses or we'll also ask other Constellation employees to come over, again, if I think Barry is doing a great job on one of the best practices, I might ask someone from his organization to come over and share that best practice and their experiences and their learnings with our leaders. So I'd say that's probably the -- we do that a lot. So you have hundreds and across Constellation, thousands of employees are taking in these best practice sharing sessions. And then at Harris, and I think some of the other groups have similar systems, we have what we call the Harris Hub, which is sort of I think of it as a SharePoint like site that is organized and basically brings all of this content together in videos and articles and artifacts that any employee can go and access. And then really, they get two benefits. They get access to the best practice, so they can learn something about it and how it was executed. But they also more importantly get the names of the individuals of the people who produce the content, so they can now go and follow up with those individuals and try and sort of take that further and obviously sort of tailor the best practice to what their specific instance is. So I'd say those are the sort of the two main ways that we're going about.

Any other group's...

Howard, it's Robin here. When we joined us TSS now Topicus.com in 2014, I just -- many of the academies of the other operating groups, and I had access to all the people here in this panel, and we're close with Mark Leonard. And we try to more or less push that down on to different portfolios to different business units and try still to encourage what I did in '14 that everybody is still doing that these days. And there's the help for the other groups. So people from Topicus go to the academies of other operating routes. I think that's very stimulating and helpful. And I still consider it as one of our strongest points as a group that learning experience, very powerful, and we continue working on that within the Topicus itself, but also in the broader ecosystem of Constellation. And there are many ways to do it. And we try to experiment and evolve, but it's comfortably on the agenda.

I think I could just add to that. I think one of the things that we try to do is have people kind of wear the numbers. I'm a big fan of leaderboards and making sure that when you show up at an event with your name tag, it has your numbers on it. So people don't want to strive to improve their numbers, you probably have the wrong leader inside of that business. So you should then go find the people who have the good results and ask them what they're doing as well. So it helps guide them to which best practices they should follow. So it's one of the ways we try to approach it [indiscernible].

This is Dexter again. I just want to add another thing is, is any time you do an acquisition, you also have to look at the practices of the acquisition. And sometimes you find kind of best practices there. And so always your book is expanding. And it's also noticing what other companies have done well. And I think from my perspective, most of our best practices have come from these businesses that we've acquired not from our intellectual superiority of trying to go and determine what is the best thing to do.

Yes, that's a great comment and kind of always staying humble and open. On kind of best practices, again, this one is addressed to Mark Miller quadrants, which was the Alaris VMS Conference happened last year, the shareholders asking -- got participation as well from head office and other operating groups. It seems like it was a lot of fun. I also read an article about it. It seemed pretty fun. Can you quantify its benefits and talk about the in-person nature of it this -- that happened last year?

Yes. It was the largest event we've ever run. We had about a little over 1,100 of our team show up in London, and we basically rented out a whole hotel for 4 days. And we ran approximately 1,600 sessions. We had over 100 conference rooms and each session was about 45 minutes long. So people kind of pick what they'd like to attend. And I call it professional speed dating, in the sense it gives you a chance to meet someone. I think Jeff referred to that, who does something in one of those 12 person sessions that you'd like to learn about. And so one of the things we -- when we surveyed the event afterwards, it was really looking at how many new people did you add to your professional network, which is, again, as Jeff was suggesting, is really the key thing here, right? In the decentralized environment, as I said earlier, you kind of got to find your own mentors or people who can help you with specific things you'd like to learn and Quadrant provided a terrific platform for that. And yes, we're going to -- we're planning another one for next year to do it sort of every 2 years and kind of ramp up the size again. So I think it was a fairly successful event. Very little lectures, almost no lecturing, all small 12-person meeting rooms for 45 minutes was the formula, which I really do like.

Yes, it gives everybody a voice on the table and it's easier to learn as well. The next question talks about the attrition at the PM level. So CSI's long-term success seems to be driven by its ability to retain and motivate top performing talent in a highly competitive market. Is this becoming more difficult, particularly at the PM level? Can any operating group managers share some statistics on unforced attrition across their businesses, particularly among PMs and BU managers?

I can speak for Perseus. It's Daniel. I would say we've had virtually no attrition at that level at the PM level. That was -- other than retirement related.

And would you say that's unique to Constellation's model, the incentives, structures? Or how do you -- what do you think some of the reasons for that are?

I think the portfolio managers in our group feel a strong sense of responsibility and ownership for the collection company. So they're typically overseeing maybe 3 to 10 smaller business units. They probably came from one of those business units. They may have a stronger affinity to that business or vertical that they came from. And they're serving as a coach and mentor for the other businesses, which ties to the last question about the semination of best practices. I think it's one of the strong ways that we do it is you have a portfolio manager, who's worked in the business, has now acquired and seen other businesses, succeed or fail in certain areas, so he or she can share those practices. So I just think with that type of role, there's a sense of ownership, accountability, responsibility. And yes, so I just -- we haven't -- I see a pretty high level of satisfaction among that group for those reasons.

Yes, maybe to add to that, Howard, I see the same. So I think Mark described it once in one of his shareholder letters or presence letters, they're called. You run your own business unit, you start coaching the second or the third and slowly over time, you build a portfolio, you move into different verticals, you move into different countries. You're getting involved in M&A, you're still involved in operations. You learn yourself, you can disseminate learnings. And it feels like your own company. So I think it's pretty close to what some of the textbooks call, entrepreneurship or whatever you want to call it, but I think it's getting pretty close. And we have the same like Daniel just said, is very, very low attrition. I think one guy left out of, I don't know, how many portfolio managers over the last few years within Topicus. And I think that's due to the reasons Daniel mentioned, I just added to it.

Yes, I can see how that would be pretty powerful. The next question is also about attrition, but at the M&A personnel level. This shareholder asks, would you agree that there has been an increase in the number of M&A personnel leaving CSI, and has that increased in recent years? If I were a mid-level M&A employee at CSI, who joined 5 to 10 years ago, would I be better off staying at CSI or moving to private equity or going out on my own, especially given that CSI stock returns are unlikely to mirror the past? Maybe a bit of a deeper one to think about.

I can start, Howard, if you like, it's Jeff. So I think at the Harris organization, we have definitely seen more turnover in our M&A function for sure over the last few years. Again, it's a combination of a much more active market. We have been hiring a lot more people. So I think those two combinations are sort of coming together. Most of our turnover actually is not on the M&A portion of our business, but I would say more in the business development portion. So again, we've been building out that part of our really professionalizing and in building that, and we definitely have a lot more turnover there. Again, there, I think, again, it's a competitive market. I think it's taken us some time to figure out the right type of professional that we're looking to hire to match them into what it is we're trying to do. So I think we need to own some of the turnover in terms of we just weren't hiring some of the right people. I think to the second part of your question, I mean, I think you're asking the wrong audience. I think most of us at Constellation would say that you'd be much better off spending your career with us. I think the learning, the growth, the opportunity far outweighs anything you're going to get anywhere else. I think, obviously, compensation needs to be part of that reality for every individual. I think obviously, that becomes very different now depending on what each individual is looking at. There's no question, I think, a financial success at Constellation is definitely time based. And I think if you're not willing to be part of what we're trying to do over the long term, and you really want quick short-term hits and short-term pops, I do think that can often be a bit more challenging for us to deal with. But I think over the long term, I think people who have stayed with us have been very happy with what they've been able to do to accomplish both personally, professionally and financially.

Yes, there's probably other areas for [indiscernible] quick schemes. Maybe the next set of questions concern competition between business units or cultural differences. So the first one is about asking, how do you handle the cultural and management challenges associated with buying a mixture of shrinking and growing businesses? I know they're run separately, but is it -- when you're trying to cross-pollinate them, is it more sensitive or tougher to do when you're mixing the two? Or does it not really matter?

I can start there, Howard. It is sometimes a challenge. But I think we spend a lot of time talking about running your businesses optimally based on where they are in their life cycle. And so we want to have the candid honest conversation about where every business is in its life cycle and making the right decision for that business unit. Unfortunately, sometimes, we end up with businesses that are "past their prime." And it's difficult to justify a major rewrite of that product. And we got to have the honest conversation with the people in that business and talk about what we can do with that business on a go-forward basis. There's still tons of opportunity to do things with those businesses. And for great people, there's no shortage of opportunities within our organization. So we quite often will take people from one business to [indiscernible] if they're looking for a different trajectory. And so, it's managing each individual situation to the best of their ability, but it starts with having the honest conversation about where your business is and we try and do that -- I'm sure we're not perfect at it, but we try and do that with every one of our businesses. And I think it's generally well received.

And maybe one about the -- to Robin, this was question posed to Robin specifically. Do any of your TSS holdings compete on the ground with any non-TSS/CSI holdings in any capacity, I guess, for customers or M&A? If so, which ones? And if so, how do your companies handle that?

To get it right, Howard, do you mean competition within Topicus or TSS or within Constellation?

I think the competition between the TSS or Topicus entities and non-Topicus, but within CSI entities. So asking about competition between those particular views.

Okay. And you asked a question particularly for Topicus because we did the spin out.

I think so. I think that's what the questioner was trying to get at.

Okay. That's clear. Okay, anyway, I understand the question. Thanks. So although we did a spinout and you could say that's maybe the most extreme form of decentralization. We're still part of the CSI ecosystem. So in that perspective, if it related to your question, there is no difference between Topicus or one of the operating groups. And I think all the other operating groups like Topicus are ambitious, want to move forward. As just mentioned before, we help each other exchanging the best practices, but everybody is trying to grow. Might have different strategies, but there is no unique position from that perspective related to Topicus. Did I answer your question?

Yes, yes, you did. Thanks, Robin. That's it for the internal operations. I'll turn it to Larry.

Thank you, Will. Thanks very much. The next segment is spin-offs and related matters. We've got a very large number of questions on this topic or these topics. But the number of themes was a little smaller. So I think we're able to boil it down to about a dozen questions. And -- like we'll try to go from general to specific, but I can't promise exactly that linearity. And some of these questions are directed to particular people who've been involved or led these, such as Dave Nylan, we'll hear from Robin again, Mark Miller. We'll start with Mark, I guess, and here's the question from one shareholder. Can you comment on the trend of more vertical/geographical-focused brand names, for example, Blue Mine for media and communications, Medaxo for transportation and Vencora for financial services?

Yes. I mean it's -- what we're basically trying to do there is just really give the whole team inside of the companies that are within that vertical a focus on thinking beyond the next -- thinking that the next company and how well it would fit in, it helps communicate potentially with a company we might be considering investing in or bringing in part of the -- into one of those particular branded verticals. I think it's been helpful from that perspective. With Constellation's growth and size and Volaris, I think it allows the team in that business to have a real focus on what they're trying to do. And I think that's extremely helpful. So that's been primarily the objective, Larry.

Thank you. And just more broadly about spin-offs. This question was asked quite a few times and the simplest way to restate it is, can you share or remind us of the conditions that are necessary for a spin-off to take place at Constellation? People mentioned things like the high quality -- the acquisition of a high-quality business, minimum revenue size, vertical offerings, further acquisition and investment opportunities. But can you share the basic conditions, and that's for anyone. But maybe those who have done it might be able to speak to it.

Yes. I can speak to it, Larry. And it's just what we've been doing. So in our case, we had TSS and Topicus and I think Topicus was a very interesting business, growing relatively large. And due to the spinout or the spin-off concept, we were able to make a deal with them, not just from a transaction perspective, but also to find long-term partners. So I think there are a lot of elements to it. But like you mentioned a few of them, a larger size transaction because it takes a lot of work. Your listed requires something as well. So in generally, our larger transactions, high-quality businesses, and preferably where we look for partners for the long term because that's one of the cornerstones of our philosophy. And yes, and so far, I think it worked out and a second thing has been done now, but it's not for me to talk about that one, but did I answer your question, Larry?

You did. There's a little bit of a follow-up, I guess, to flip it around one of the questions was, why not make all the operating groups or each of the operating groups a stand-alone public company? What are the constraints?

Well, in -- I think that one for Constellation is to answer for Mark Leonard, I guess. But in theory, you could do multiple spinouts because the concept works. And as I mentioned, we're still part of the ecosystem, and it's the ultimate form of decentralization and unit enables us to get partners on boards to build great businesses. And there are different sides to it, two sides. And you know it's for us as Constellation or in my case Topicus, but I think also for the partners that are joining us. And so yes, I think there's really 1 plus 1 maybe not [taxable] 3, but definitely more than 2. And I think that's definitely there. So I think it's going to be an interesting instrument, not for each situation, but you could do it more often. And I still think you could end up with -- we have two now, but you could end up with more.

Actually, I can add ...

Go ahead.

Actually, I can add to that, Larry. Just I think it's really important that the team inside of that organization that wants to -- wants to do that and understands what's required to do that as well. So I think that's a very important part of it. So I think that will also be a factor that determines what actually could get spun out as well.

Thank you. A very narrow question, I guess. One person asked, can the spin-off help with managerial retention? Is it a way to keep talented people within the Constellation family?

I would hope so, Larry. You'd hope so because they're able to waive their flag in a very -- as Robin says, in the ultimate decentralized format inside of Constellation. So...

Well, here's another question suggesting a different form of constraint on how many of these can be done. This shareholder asked at some point, at some number of spin-offs, they suggest 6, do you worry about the resulting complexity for investor understand it? If spin-offs are fully consolidated into CSI's financials along with minority interests?

I'll take a crack at that, Larry. The CSI financials or spin-off companies are very, very complex. And I think we can make them simpler. And we could do some non-GAAP financial presentations. And I certainly talk to our internal reporting people about doing that. So in investor shoes, I would anticipate that happening over the next few quarters.

Thank you. This question is a little long. I couldn't really shrink it too much. So bear with me a little. It gets into the question of valuation. So Bernie, you might add some value. It says, Constellation has not directly used equity to make acquisitions. But at the time of the spinout, the Topicus and Blue Mine shares were issued to pay for acquisitions of Topicus and [Wide Orbit]. When thinking about the value of consideration paid and the return on invest, do you use the nominal value assumed in the prospectuses? Or do you assume a market value for the shares more in line with Constellation's public valuation?

I'll take a crack at that as well. We look at the present value of the future cash streams of the business that we're selling a piece of and value it with a similar hurdle rate to the business that we're buying. And the natural step-up that we get if we go public is the benefit that we then end up sharing with the vendors. One of the issues around the structured acquisition/spin-offs is that we're also looking to invest cash at our hurdle rates in the combined entity. If we just [indiscernible] the swapping shares for shares at their fundamental intrinsic value based on our hurdle rates, then there's no intrinsic benefit to ourselves.

Thank you, Mark. Back to a specific questions, starting with Robin. How does Robin or Topicus think about the potential use of Topicus stock to make further acquisitions?

Well, I think the benefit of being listed is that it provides optionality, and this is one of the options. But I think we prefer to acquire companies and like Mark just said with his story is, we prefer to invest our cash. We generate strong cash flows and the preference is to deploy that. But you have different options being listed. So it's an option. We haven't used it. Our main focus is on deploying our cash flows. And we have also access as [dockers] to credit lines, which was announced end of last year where we extended our banking facility. So our strong focus is there, Larry.

Thank you, Robin. The next couple of questions are for David. David [Dylan]. Welcome to the panel. Congratulations on the investment you made, the spin-off that you're managing. The first question is the same question we just put to Robin. How would you think about how would you want to think about the possibility of using Blue Mine equity in its future acquisitions?

Thank you, and happy to join the call. I think my answer would be very, very similar to Robin's. We're a very young spin-out. We have a lot of good free cash flow, and we ourselves will have facilities. So job number one is to deploy our free cash flow, use the resources that we haven't had. Won't roll out in the future, but it would have to be something very strategic, which would lead us in that direction.

Thank you, David. Here's another nice question. A little intricate, but dovetails with that one nicely. The shareholder rights is Lumine's acquisition runway long enough in the communications and media end markets to continue to deploy all of your free cash flow? Or would you expect to expand into adjacent areas and if you can say which ones?

Yes, we've got a tremendous amount of runway in communications and media and think of it as one of the younger portfolios, although we've spun out for really only 10 years into this. And we're very, very big lead database and a very active pipeline. If you were to take big verticals like financial services, healthcare, government, think of communications and media being in that list of the top verticals in terms of size. So we're just getting started. I couldn't rule out in maybe 10 years' time. We need to look at adjacencies, but I can't see it in the foreseeable future.

Well, thanks, Dave. This -- a lot of people are curious about the background, the WideOrbit investment, how do it originate, how did it come be? Can you share a little color on that?

So WideOrbit would be one of the larger assets that we would have been nurturing for a number of years. We've been somewhat active in the media space, but we haven't really bought or merged with, in this case, a very sizable platform company. WideOrbit was looking for strategic options, going public themselves would have been difficult because they really weren't diversified enough, taking on more private equity money to create a liquidity what they've been through that journey before and it wasn't a pleasant one. Eric is the CEO of WideOrbit is a student of business community. So he's been studying CSI for a long time. He saw the Topicus spin out and how well that investment went. And it got to a point in our conversation where he wanted to see if we could get something done similar. And that led into a process of ultimately valuing the businesses and [Indiscernible] readying itself and the rest is history. But -- and one single decision maker on their side made a huge difference. So that really expedited the process. Does that make sense?

Yes, it makes great sense. And to what extent -- so familiar with the Topicus transaction. To what extent did learnings from the -- did you adapt your transaction based on learnings from the Topicus transaction?

It's part of the reason why [indiscernible] Robin on my Board here [indiscernible] is we wanted to learn from the Topicus experience. There's a lot of great similarities between the way Topicus transaction went down and the way the Lumine transaction went down, but there's also a lot of difference. We had to basically disentangle ourselves from Volaris. From a legal entity perspective, from a business systems perspective, and we had to create audited financial statements as if we were an amalgamated business for a few years when we really weren't. And there was a lot of additional challenges to work through. We weren't really a stand-alone operating group like TSS was. We are a portfolio within Volaris. So there were some very unique challenges there. So we took the learnings of what went well with Topicus some of the challenges they had tried to avoid the challenges they had, be more proactive in some of those areas because we had a whole list of stuff that was very, very unique to Lumine.

A couple of questions have come in the chat, and they dovetail with some we got ahead of time. So here's putting two of them together. One says, in the press release announcing your investment in -- with WideOrbit, Mark Leonard called it an extraordinary business. Do you agree? And if so, how so? And another question related, I guess is, this is what it says, I'm just going to read it, David. It's Lumine, a good company. It seems tied to TV advertising, which is in secular decline. How do you assess those two points?

So first of all, WideOrbit is an extraordinary business. And to do a spin out, I think you need to find an extraordinary business because you wouldn't otherwise be able to acquire that business in a traditional sense. It needs to be the concept of a rollover significant shareholders that have an interest in staying and going for a journey with the Constellation spin out. So WideOrbit fit that profile very, very well. They're extraordinary because they have great market share, good profitability, high levels of recurring revenue and a great management team and a strong organic growth track record. So all the quality is -- very low attrition, I should say. So all the qualities we look for and also low customer concentration. So advertising spend in [Lumine] over a century and the century in front of -- over a century and a decade in front of us has been declining, but at an extremely slow rate. But those customers are also participating in digital and launching over top channels, fast channels and there are large digital platforms that need ERP software as sophisticated as WideOrbit. WideOrbit won a large contract last year with Amazon to do Thursday night [indiscernible], as an example. As you mentioned the ad spend, the quality of the ad spend and the value of the ad spend going through that platform is very significant. It requires very sophisticated traffic management systems. So I think there will be some decline. I think their customer base will move to digital. And I think there'll be large digital platforms where WideOrbit will soon be well suited to gain market share.

Thank you very much, David. Final question for you coming in from the chat observes that Lumine's acquisition investment size tends -- seems to be higher than the average investment or BU that other Constellation units -- portfolios acquired. Is that true? And why might that be? Is that something you're looking for or just the opportunity set that you're seeing?

Yes. We see three personas. You see the owner-operator persona, which we -- a lot of our early acquisitions. We see the private equity sale, we see corporate carve-outs, and we've done a lot of corporate carve-outs. With the private equity sale where we're quite well known now to the brokers worldwide because we've been very, very focused on this vertical, we're going to see a lot of private equity deals. And with the amount of time we spent nurturing the relationships with the corporates, we will continue to see carve-out opportunities. So private equity sales and the carve-outs just tend to be larger assets. We will continue to focus on the owner-operated persona, for sure. But I think we'd probably see more private equity and carve-out deals. And that's the reason why our average deal size is a little bit higher.

Excellent. Thank you very much. Unless one of the managers wants to say any further about spins, those are the questions we had in that category. So if anyone would like to round out the topic, incidentally, we now have 650 people in the meeting, which is a record. And if we've exhausted that topic more or less, we'll move along to the next segment, large acquisitions. Will, back to you.

All right. Thanks. So first question about large acquisitions is that the CSI Board lowered their hurdle rate for larger acquisitions a couple of years ago. Did this action favor or enable the latest big acquisitions like Altera from Allscripts or WideOrbit among others?

Yes, certainly -- it's Bernie Anzarouth. It certainly did help us get to close the larger acquisitions. We're being invited to more and more of the larger businesses so that we can at least participate in looking at them and going through diligence. Certainly, at the high end of the market, we have a lot of competition. And so those prices are still very much up there. In the last year, we've seen them deteriorate a little bit, which is good, but they're still very, very high. But certainly lowering the hurdle rate for those businesses has helped us access a few of them.

Great. Thanks, Bernie. The related question, which is the shareholder, we recall hearing some time ago that the participation rate of CSI in large transactions was around 16%. Do you have an update that you could share?

We're not ready to share those that kind of data just yet.

Okay. Fair enough. How would you rate at this point in your success in sourcing larger acquisitions? Is one large investment annually success? Or would you like to make more?

It's very hard to predict where we'll be able to succeed. As I said earlier, there's a whole lot of competition coming from strategics from private equity. Just the fact that we're -- we've been able to get out there and get our name known amongst the investment bankers that broker these large transactions gives us a leg up from where we were years ago, where they wouldn't give us the light day. So today, we're doing much better in that we're able to see more of them, for sure. Our participation rate has increased, for sure. Whether or not we close them, I'm not going to compare myself to -- ourselves to 1 a year or anything like that. It will happen when it happens.

Great. And then in terms of the -- how they've done so far, how have the larger acquisition cohorts and this question specifies greater than $75 million of enterprise value, performed versus other size cohorts. Is there anything notable to call out there?

Have they done financially? Have they done ...

I'm guessing that's what the question is.

Throw it out to the other guys who have done them. I don't really think we could compare the acquisitions that we've made to the cohort of large businesses outside of our company, really.

I think this is internally versus other sizes. You did say that the lowering of the hurdle rate for larger deals did help. So that would imply that they've been a somewhat lower IRR than the smaller deals. But I suppose the question is, a, specifying an enterprise value greater than $75 million, not sure where the cutoff is there and then just a little bit more color on perhaps how we have performed?

I'll let the other operating group managers answer those questions.

Well, we track our investments, small, midsized, large, we track them all. And without going into the details, I don't see any deviations related to our hurdle rates for those sizes, which would imply that the larger ones do fine as the small ones, as the medium-sized ones. So we don't see any particular deviations there.

And are you saying that they're basically close to the hurdle rates that you set for various sizes or that they all return about the same?

We use hurdle rates for particular investments. And I think that's where we rate ourselves on. And if we make them or not, it looks like we make them for different types and different sizes.

Does any operating group manager have a different experience across sizes? Okay. I've got a question here. Are there significant lessons from Altera or other larger acquisitions that make you more or less confident about generating attractive returns in this area, large acquisitions, in the future? And I would like to hear from some operating group managers other than and then Jeff at first because Jeff has a couple of questions that are specifically asked to him in a bit. So others that have done larger acquisitions, any significant learnings or lessons and how they sort of flow through to your confidence about doing more?

I mean I could just throw something simple -- Mark Miller here. Just I think it's -- you have to -- one of the things we've learned is you just have to spend more time driving best practices down because there's more levels between your -- the person who's helping bring that company the best practices we have to drive them down through multiple levels in the organization. So that's just one of the things that we've learned in. But it's definitely doable. That requires more focus on that than when you're acquiring a smaller business.

Makes sense.

I could add a little bit if you want. It's Barry here. I guess one of the things that we've experienced is ours have been corporate carve-outs. And so there's always a bit of a difference in the corporate carve-out than there is with an owner operator. So it's a unique situation. The transition into our group is generally a little bit harder. But if you focus on it, you can get the results you need. So you just got to go knowing what needs to get accomplished and make sure you have the right team and right people on the implementation side to get it done, but that's been kind of our experience.

And now maybe, Jeff?

Yes, I think when it comes to larger sort of not speaking to Altera specifically, although it would fit into the same category. I just think the larger of the businesses are, the more opportunities there are to do things. So to Mark's point, whether there's more opportunities to leverage our best practices or they're just more levers to pull within the operations to help us get to or exceed the hurdle rates that we model in smaller businesses, you have a couple. And if they don't work out exactly as you had intended, it can be a little bit more challenging to find other ways to get there. If I want to the larger ones, so it's just -- there's a lot more. And then the magnitude of what you can do when you put the best practice through tends to be -- tends to give you a lot more return as well on the larger transactions.

Great. The next question for you is, could you expect -- could you discuss the expected and unexpected delights and difficulties of integrating and operating a comparatively large entities such as Altera from Allscripts? How is it progressing relative to your investment thesis when you acquired the business?

Yes, that seems like a bit of a loaded question. Yes. I mean I think there's lots of things that have gone better than we had hoped. There are quite a few things, I think, that we -- maybe we didn't understand as well as we should or that are definitely taking longer. I think -- to focus on the positives, I think the leaders that we were able to move over from the Harris organization have been outstanding in terms of their ability to grasp hold of the business and start to do the things that we're doing to it. So I mean, basically, we inherited one sort of Goliath business, we call it Altera, the carve-out from Allscripts. We now have turned it into 11 very focused business units, right, with their own, again, focus on your product and customers and employees. So I think that, to me, has been -- it's been a huge effort, but I think it was the right thing to do, and I think we're now starting to see the benefits of having done that. The other positive is when you acquire an organization with 5,000 employees, there was just some amazing, amazing talented employees in that organization. And I think helping them look at how to run a vertical market software business differently has been, again, very positive. So again, they're embracing our best practices. They're engaging and again, trying to do things differently. So I think those have all been the positives. I think some of the negatives, I think, are trying to change a globally-based 5,000-person organization, like it just takes time. It's just -- it's slow. So we now getting the message out and keeping that message going consistently is a bit more challenging. I mean, no different than the rest of our organizations. But again, you can't put all the employees in one room and lock the door and not let them leave until they sort of -- you get everybody on the same page, like you have to do that again and again and again. I know our leader, Marcus Perez, is responsible for that group. He just spent 22 days traveling the world, right? Just again showing up in different places, trying to make sure we get different employee groups, understanding what we're trying to do and helping them sort of move forward through the obstacles and the road blocks. So it's just a -- it's a lot of work to getting out and seeing these customers. Again, you're not just getting on a plane and seeing 4 or 5 customers. You have to get -- you have to fly across the world to see these different customers. So again, it's just taking a little bit more time. I think like anything else, some of our choices, I think, on our -- still our relationship working with Allscripts, I think whenever you have two very large organizations that are trying to do the things that they want each to do, can be challenging. So I think we've had some challenges with them. But nothing that we won't be able to figure out or work with. And again, we have good lines of communication. And I think when we have to have the right conversations, we're able to have them. So I think I'm not overly concerned about that.

Okay. It may be early to say, but with respect to the financials, there's a question that goes since you purchased the Altera business, revenue growth has underperformed Veradigm's guidance, while free cash flow margins have outperformed. Is this what you expected?

Yes. I think in the short term, there's just a lot of noise on the revenue side. So again, I don't get too fussed by again, these monthly and quarterly variances. Again, now that we've broken the business into 11 separate businesses, we're getting actual forecasts and ownership of these forecasts coming up. I think we're creating what we believe will be our revenues going forward. So I think I'm waiting for those to come in, and I think that's what I'll be more focused on. And I think on the cash flow side, I think you're seeing what you're going to see with pretty much any Constellation acquisition, right? We're very disciplined buyers and operators of these businesses. And cash is king, and we're going to focus and make sure we understand where the cash is going and make sure that we're monitoring that from the get go. So I'd say we might have more flexibility because we own the business forever. Where the revenues are going, we are -- we pay very, very close attention to the cash flows of any business, particularly in this business.

Great. Last question in this section has to do with pre-Altera acquisitions in this arena Constellation, specifically, Harris in this instance, experienced customer loss in this area that impacted overall organic growth. Despite these headwinds, how these acquisitions gone versus expectations? And what key ongoing learnings from your industry experience can you apply to Altera?

Yes. I think healthcare in general, I think we got into it in 2013, and we've built obviously over a $1 billion business in healthcare specifically. I would say that a lot of our earlier healthcare deployments were very good investments, not always great businesses. So I think that to me is the reason why you would see lower organic growth or shrinkage when it comes to those businesses. I think -- from a learning perspective, I think we've learned two things. I think we've learned to understand the dynamics of healthcare, specifically probably U.S. healthcare because that's where most of the businesses are, better. The attrition profiles, the profit profiles, the customer profiles. So we're taking all of that learning into account as we continue to make investments. But I think we're also quite comfortable with the life cycle and the returns that we can earn on these businesses. And we will not shy away from, again, making good investments that, again, on a piece of paper, if you want to see 10% organic growth, you may not see that from, again, many of the healthcare businesses that we buy, but we're quite comfortable. They're still all are very good investments.

Great. Thank you. That concludes this section. Howard, over to you.

Thanks, Will. So now I'm going to move on to the financials -- the questions on financials. And a number of these questions, of course, are posed to Jamal, but there's also some to Mark Leonard and also the operating group heads as well. A number of these questions are, I think, from shareholders trying to understand some of the non-GAAP metrics, specialist Constellations business kind of evolves. But the first one is actually in the financial statements and -- so Jamal, can you give more information on the equity securities held for trading on CSI's balance sheet?

Yes. So I can't get into the details of what specifically that investment is other than it was a place to put cash in short term that would generate a better return than just holding it in a bank account, and we're actually divesting some of that investment now. So -- but nothing ...

With rates being higher now, is it easier to leave cash in the bank? Or still better in those investments?

Yes. I mean, what's better to invest it is in acquisitions, and that's what we're trying to focus on as opposed to keep it in the bank .

Fair enough. This one is about disclosures of ROIC. Why did you stop disclosing CSI's ROIC in the management information circular? And it mentioned in the last time was in 2021, where there was a ROIC of 29%.

Because the numerator is no longer -- it's a non-GAAP measure that we don't disclose. So I didn't want to go through the whole process of creating a -- disclosing a metric that we don't use in any of our [indiscernible].

Maybe it's a good one to jump in about adjusted net income versus free cash flows. And this one is also open to the group actually. All of your own stock in CSI, when you value the companies, and I'm assuming they mean for M&A, do you use FCF adjusted to shareholders or some measure that is more similar to the old adjusted net income for, I guess, valuation purposes. Why is FCF more useful than adjusted net income for investors?

The free cash flow available to shareholder metrics starts with cash flow from ops. I mean cash is what's key to us. I mean, the one argument or maybe you can talk to me not pretty capital available to shareholder metric, it is -- it's not cash would be the [indiscernible] change every quarter. Now we need to do that because of the fact of accounting, the earlier exists, we have to consolidate all of our [Jonas] investment in Topicus, et cetera. So we're doing it to align our financial statements. But if you ignore the [indiscernible] part, you're getting to a cash number, right? It's deducting depreciation or investments in property and equipment, but deducting interest expense, et cetera, right? And so all of our return on invested capital number is when we're making investments is based on cash, and that's free cash flow available to shareholders to be cash [indiscernible].

Yes, I think it's fair because that's what Constellation really cares about. And maybe on the -- there's also a few questions about free cash flow, so maybe I'll just go to there. One is about this TSS membership liability adjustments of the [indiscernible] adjustment. If this is a noncash charge, why is it taking out of free cash flow? Is it just because of Constellation's conservatism, transparency or the show they're asking -- Am I missing something?

No, it really is because of IFRS, we are -- or under the rules of IFRS, we are required to include [indiscernible] 30% ownership of Topicus in ours because of the [reliability]. So if I'm going to include their cash flows in that number, then we needed to say, okay, well, what's the cost of including that Constellation and that's the additional cost each quarter that growth and that liability. And so we're aligned from a financial disclosure perspective. I'll be honest, like internally, when I calculate bonuses for CSI head office employees, we do not include their liability, but we also do not include the 30% of the cash flows of [Joe Days] right? And so we're aligned from an internal reporting. But that's why we're putting in there because we're forced to include Joe Days for external disclosure.

Yes, and that makes sense. You're trying to line apples-to-apples. And maybe also another one about related to Topicus cash flows. But also, I guess, it would expand as other groups make more minority stake acquisitions. Have you considered disclosing the free cash flows for GEO software, Cigniti and subsurface so that Topicus shareholders can calculate free cash flows owned by minority interest more easily?

I mean we do disclose the portion does not relate to the minority holders as a combined number. I mean, it's actually immaterial if you break the individual components out. But I believe -- yes, I mean I'm showing what the cash flow is available to shareholders that does not belong to -- that belongs to the minority holders in our exposure. So that number is there.

It makes sense. I've gone a bit numbers heavy, so maybe I'll ask another one to take a bit of a break. And this is a question to everybody, all the operating group heads and people M&A. Please provide an update on how you think CSI's financial model or especially margins would evolve in a theoretical situation with no new deployment of capital and acquisitions? So have -- the operating group heads, have you looked at that? What would it look like? I guess this shareholder wants to know.

Yes. Howard, it's Jeff. I mean, we've talked about it conceptually. I don't think any of us have sat and built models that would contemplate doing that. So clearly, if we're not deploying capital, there's a lot of money that will be returning to the P&L that we're not spending on M&A and business development. But I think, at the same time, if we're not deploying capital, we're definitely probably more focused on organic growth. So we're probably really digging into the businesses now and investing for future growth. So I think -- well, I think the M&A spend would go back in as a positive. I think the investments in organic growth and higher R&D spend, perhaps at 14% that you quoted earlier, might change. I think that would change. So again, I think you'd have pluses and minuses, I think, in terms of what it would be. And I think theoretically speaking, we don't think that way. So I'm not really sure we can sort of say margins would go from X to Y. I think you'd have one benefit to margins. And then I think you'd have one at least near-term detractor. Obviously, over time, you would hope that organic growth would pay off with high IRRs and give you a return, although if you're always investing, I don't know when that would actually settle through in improved margins.

Yes, the question is kind of interesting because it assumes a steady state where there's capital -- if it's not deployed in acquisition, it's going to be deployed somewhere else and to your point, Jeff, it might be deployed towards organic growth. And in that case, maybe that will affect margins anyway. So it is an interesting thought experience, but maybe something that's -- it's not as relevant given that there are a lot of M&A opportunities. I'm going to have to jump back to some financial questions and actually have something on the chat asking Jamal, this -- what you feel about these questions on the scale of 1 to 10, but that was just -- I'm sure that was more a rhetorical question. So there's a question about ROIC -- actually about disclosures of revenues and acquired revenues. And this is a show there may be challenging the disclosure of the current disclosures. So this shareholder says, shareholders should be able to monitor implied acquisition multiples from your financial statements because price matters. Some years, you disclosed revenues acquired. In 2022, you did not. Are the competitive benefits of not disclosing aggregate revenues acquired really worth sacrificing the ability of shareholders to make data-informed decisions? Do you want shareholders who think are those who are just here for the stock price momentum? Sorry for the tone of the question. And that being said, ex Altera, how much annual revenue did you acquire for $1.1 billion in 2022?

So I can't answer that specific answer. I mean maybe, Mark, I don't know if you want to talk about this from a CSI disclosure perspective. But I believe we're providing the information that investors need to make informed decisions, right? So me adding what the multiple is, we pay for the average number of acquisitions we made, I don't think is a key driver of valuation of Constellation, meaning you've also got to take into account that what amount of debt is there, how profitable is the company, what we're going to do with it shrinking growth, like, mean, just giving you a multiple of revenue. It's not a key driver, I believe. but I don't know, Mark or Bernie to talk generically about disclosing multiples.

Yes, we generally will not disclose those -- that kind of information. I mean there's so much competition that's out there. Any disclosure, which has put us more on the defensive, there's just no upside to it.

This question is kind of to Mark Leonard or John Billowits, but kind of even the -- I think everybody because a lot of the group managers are also on the Board. What is your latest thinking about running with more CSI-level debt? So I'm guessing the question is excluding the nonrecourse debt that groups take on, but the debentures, for example, you issued years ago, would you -- what is your thinking in terms of that level of debt?

We're happy to use debentures. We view it as a very friendly financing. And so if we can raise more at attractive prices and deploy the capital intelligently, we'll do so.

That's fair. Okay. And then another one addressed to Mark Leonard. ROIC plus organic net revenue growth has been a relevant compensation metric for a long time. And I'm assuming they're referring to the chart that used to be in the President's letter, which added up ROIC and organic net revenue growth. Why should 1% organic growth be equivalent to 1% of ROIC?

It isn't -- and it depends very much on the particular economics of the business, but it's a rule of thumb that kind of works for us. Ideally, 1% organic growth is worth more than 1% of ROIC when you're in a negative capital employed business, but these are things that you can easily model for yourself if you want to look at it.

Yes. It just depends on how much is spent to achieve that 1% organic growth as well, which is a separate measure. That's it for the financials questions. Thank you, everybody, for bearing with those. But we did get a lot of them this year from investors. So we put them in a section -- special section. But it's over now and I will turn it to Larry.

We enjoyed that section. Will, thank you and thanks, Jamal. The next two segments are on M&A, mergers and acquisitions. The first segment is on the M&A environment. And the next section that Will will take up is on the M&A process. So on the environment, most of these questions seem to be offered to anybody. First one, and maybe Bernie is best synthesizer. But the first one is whether you're seeing in the M&A market today in terms of number of acquisitions, buyer/seller expectations and so on and how -- in particular, does the current environment compared to last year or to say 4 years ago?

Yes. I think despite increasing interest rates, so our bread-and-butter type of acquisitions, we haven't seen any slowdown in the amount of competition. It's interested in buying these targets. We know that prices have been creeping up for the last few years and maybe in the most recent year or so, maybe they stopped going up a little bit. But it's just such a huge range of pricing from bottom to top, and there's still some frothiness that for very high-quality businesses, people are willing to pay significant premiums. So that hasn't disappeared. On the very high end of target sizes, maybe those multiples have decreased a little bit, but they're still extremely high. There's a lot of dry powder that's out there. There are a lot of people trying to get into the buying VMS business, so the competition has not gone away. Maybe some buyers have become more rational because they haven't seen the returns on their investments, but competition hasn't gone away.

Any rising competition from the Constellation copycats? Several shareholders were interested in knowing have you seen people trying to be like you, trying to emulate CSI and have they succeeded in competing?

Yes, certainly. Over the last few years, these copycats have come up. I mean, all you need is a checkbook and a phone. And if you're willing to pay more and accept lower returns, then yes, you're able to compete with us, for sure. That's not going away. I think maybe over time, some people might not see the returns that they expected going into the buying VMS business. So maybe that will go away, but I don't see that happening anytime soon.

I remember that quick about the phone and the checkbook, but aren't there significant competitive advantages that this company possesses that a copycat simply can't replicate?

Yes, absolutely. I mean, over the years, as we've learned so much about running these businesses and just the vastness of a number of business units that we have when we acquire these businesses and we get the management team to go around and visit other groups, other business units to learn what we've learned over the years, it's a tremendous opportunity to learn from your peers. There's also the buy-and-hold mentality that we have. We do not sell businesses. So for us, an owner operator, who has spent years, 20, 25, 30 years building a business and cares about his employees, he cares about his customers, they know when they sell to us that we're here for the long term. We're never going to be reselling that business. Lots of upside of working with us, for sure.

Within that -- well, several people also asked about what they think you're doing a great job and expect that you'll be able to execute well on your opportunities to that. But people are wondering how -- what is the size of that opportunity set? And especially that sweet spot that you talked about that the carrying entrepreneur who wants a permanent home.

We continue to add leads new businesses that we never heard of before into our database, and that database has grown tremendously over the years. We will continue to see more and more businesses out there, software is changing the world. I mean so there are new businesses popping up every day, whether or not they're a bull's-eye for Constellation, remains to be seen. But there is a tremendous opportunity still out there. Of course, with competition bearing down, it always makes it difficult.

I like to -- well, you made a reference to the world, several people are curious about the size and direction in markets outside the United States. Are you seeing an increasing opportunity set around the world?

Yes, absolutely. I mean we see it in Europe, we see it in Eastern Europe, across Asia. There are businesses everywhere, software businesses everywhere. And the number of people that we've employed in M&A has increased globally. So we're able to tap into those markets that we haven't seen in the past, and we're trying to get closer and closer to those businesses. The bulk of the software businesses that we've been interested in the past not about let's say, half of it have it come from North America, but we see tremendous opportunity elsewhere for sure.

Thank you, Bernie. This is a lengthy question, but it's I'm going to read it. As we've discussed earlier today, David [indiscernible] is focused on carve-outs and communications vertical. Harris has acquired Allscripts among other acquisitions undertaken by various groups. These seem like excellent opportunities to deploy capital at these carve-outs and large acquisitions. Here's the question. Could you comment on the attractiveness to -- of these situations and the opportunity set? For example, are there verticals where such opportunities are more prevalent than in others?

I think one of the benefits of working with us, maybe not on the verticals, but on the carve-outs, carve-outs are very, very difficult to complete to execute properly. You're dependent on the parent company for a little while. You have to set up an infrastructure to get the carve out going, hire all sorts of people. They're very, very difficult and not a lot of people can do that. So for the vendor, for corporation contemplating a carve out, they know that they can execute a business carve out with us because we have the experience, we have the capabilities, we've done it before. Very difficult for both sides to go through that kind of situation. But if it's some entity that has never done it before or can't build the infrastructure in a timely fashion, it will be more difficult for them to do so. I would say more on the corporate carve-outs rather than vertical or industry in particular.

Do you know roughly how many carve-out acquisitions the Constellation groups have made?

There's lots. I don't have the number at my fingertips, but we do keep track of the carve-outs. for sure, the number that we've done.

Thanks, Bernie. Here's question about debt cost. The question is it notes that debt costs have risen significantly lately as this translated into less competition from private equity on more direct acquisitions and/or have your borrowing costs risen so that these effects offset?

So the competition has not gone away. But I think what's happened is with increased interest rates, the prices that they are willing to pay has moderated a bit. Now moderated is a relative term. It is extremely high. Now it's a bit less extremely high, so from private equity. So those prices have gone down just slightly. Again, there's a lot of dry powder out there. And there's a lot of bank debt that's available, some bank that has pulled back. So they're not always as forthcoming as they used to be. Maybe some of them have gotten stuck with commitments that they've done in the past, not knowing how quickly interest rates were going up. So some banks have been pulling back. Some private debt has been pulling back a little bit, and prices have been going up. I don't remember what your second part of that question was, Larry?

Yes -- and what about your own cost, CSI group?

Yes, they're still within the realm of how we structured the acquisition in the first place. So we don't see any issues there.

And are there any particularly attractive opportunities among venture-funded SaaS companies in this environment?

Opportunities, I don't know that I would actually put that in a separate category. Anyone else had anything to add on that? I would just say it's the same kind of opportunity as whether it's SaaS, whether it's on-premise, we just don't differentiate between those.

Here's the last question -- thank you. Here's the last question. This segment it strikes to me somewhat philosophical, but maybe it's really hard headed. But it is kind of vertical market becomes so large that it loses some inherent attractiveness of VMS and acts more like a horizontal market, for example, the electronic health record market attracts more competition, given its size.

For the longest time, I think we were hesitant to get into the largest verticals. But if you can pick your niches within those large verticals, I think there's opportunity for everyone. And so I don't think you can ever really call it a horizontal business. There's always a set of circumstances to make one particular acquisition attractive over others. But I think very large verticals do have their own specific niches. So that's -- that wouldn't change for us.

Excellent. Will, over to you for questions on the M&A process.

Great. Thanks, Larry. So just to start very broadly on M&A process, we'd love to hear from a number of you on what success looks like from a capital allocation perspective each year? What are you hoping to do?

I can start there, Will, if you want. Obviously, our -- one of our targets is to try and redeploy our free cash flow. So the first thing we start with is what's our free cash flow going to be in the year and how can we try and achieve that. The second is to hopefully make intelligent deployments of capital. So obviously, we're not perfect. We've made mistakes in the past, but the goal is to not make mistakes, make sure we learn from our previous mistakes and hopefully, every acquisition we do ends up being what we expect, if not better. But that's really what we target is we want to deploy at least our free cash flow, and we want to make sure we limit the number of mistakes we make. And that's the ongoing challenge that we think about at the start of each year, I think.

Will, it's Jeff. I think obviously exactly what Barry said. And then I think -- we also are always looking at, are we making the right investments today to build out our acquisition pipeline and funnel to support continuing to deploy our free cash flow, which continues to grow over the next 2, 3, 4, 5 years? So I think spending time on the front end of the process to make sure that we're well positioned not just to succeed in 2023 but also for the next -- for the foreseeable future.

And I think to add to what Barry just said is to be able to do that over time to make your organization fit for the future to make it scalable. So we have to think about that as well. So we have to think about things today to be successful, like Jeff said, also further down growth, so to bring it all in line. It's not just about 1 quarter or 1 year. It's, like Jeff said, to be successful for many years.

That dovetails with the question that we've had come in live, which is -- what do you think the odds are that CSI is still deploying 100% of its free cash flow on acquisitions 5 years from now at attractive returns, which gives you some sense of how shareholders are thinking right now?

Well, it's very difficult to predict. Certainly, we hope our cash flow continues to increase over the next 5 years. It will always be a challenge to redeploy that capital.

Great. So returning to the [indiscernible] now. Constellation is making more acquisitions and breaking its own capital deployment records lately. What are the biggest drivers? Is it coverage or conversion, which has contributed more lately would you say?

Well, it's Bernie again. I think coverage has increased dramatically over the years. We've made acquisitions this year that -- with companies that we've been talking to for 10 years. So being in the market for such a long period of time since '95, we've been able to develop relationships over the years. And when an owner operator is ready to sell the business, hopefully, we will be one of the first companies that they contact. But just the fact that we've had so many people out there knocking on doors, developing relationships, trying to make sure that companies think of us when they're deciding to sell, I think that's helped tremendously.

And going forward, which coverage or conversion rate would we think can be improved the most to create more opportunities? What sort of challenges stand in the way?

I think what we need to do is get relationships started and maintained at all levels. So we do have business development people that knock on doors, may have M&A folks, but we really need our portfolio managers and BU managers in same markets to go out and talk to folks as well, and we are doing that. It's just a matter of increasing that number. And if you think of the global opportunity, we need our folks in far reaches of the world to go out and try to make contact with businesses that are or may be available for sale.

Great. Conversion has a lot to do with hurdle rates and price. There's one question that's coming live in a recent interview, a former CSI M&A manager "complaint" that he could have made significantly more deals if the hurdle rates were just slightly lower. How do you make sure that you're not leaving deals on the table -- acquisitions on the table with an attractive IRR?

I think we have a lot to offer as Constellation. The management teams that join us get to, again, learn best practices from their peers. It's not something that's common within other businesses. So if, yes, somebody wants top dollar, and that's the only thing that they're concerned with, then we might not be the right buyer. Sometimes we are the top dollar. So it always depends on the circumstances. But if you were selling computers, you're going to have competition in selling computers. So do you need to drop your prices by 10%, so you get more market share? Well, your competition is going to do the same thing. And so it's a never-ending cycle. At a certain point, we have to draw the line and say, well, this is -- these are our hurdle rates, and this is the way we're going to go out and make acquisitions. Again, we have a tremendous opportunity. It's a matter of selling the opportunity to join Constellation Software.

A broader philosophical question related to that. Over time -- this is a live question. As acquisitions get larger, hurdle rates are likely to trend downward. What is the lowest hurdle rate for future investments that Constellation would be willing to tolerate? At what IRR would it make sense to return capital to shareholders?

We generally don't discuss the hurdle rates and moving the hurdle rates. So I think we'll have to pass on that question.

Okay. Fair enough. I suppose one more on coverage, which you mentioned earlier. Is Constellation now being invited to participate in a larger share of broker-led sales today compared to a year ago? I don't know if you keep track of that, Bernie or if the other, or Jeff, do you want to chime in?

Yes, we do. We have been invited to more and more at the larger end anyway. The usual bread and butter, we're one of the first on the list amongst the brokers and we'd like to keep it that way. But certainly, on the larger end, yes, we've been invited to more and more.

Great. Here's a couple of questions about how the company thinks about vertical market software? Does CSI have a broader definition of vertical market software than others? Many of CSI's businesses don't appear to be vertical software necessarily such as [indiscernible] in Iceland [indiscernible], SRL which seems more like a tool, those that have substantial service and implementation components in much of ERP software, the economics of these businesses seem different from pure VMS. Can you comment on how you define VMS and how you view these different types of software businesses?

I guess I could take that one as well. We have been acquiring horizontal businesses for quite some time already. The criteria that we see in these horizontals that make it attractive are very similar to VMS. They all have their own little niche, whether it's geographic protection, little competition within that geography. Within ERP is one certain segment that they're more capable of selling to. So there are always these different characteristics of these horizontals that we see that are attractive and very similar to VMS', and that's what we will continue to chase down. So it's not just vertical that we're looking at. So we are looking at horizontals to the extent that they are similar to our VMS businesses.

Thank you. Does anybody else have any thoughts on tools or amount of service? There's a separate question that came in, which asked or notes that certain recent acquisitions have a revenue mix, which is skewed more towards IT services and wonders what types of IT services are good fits for your acquisition criteria? So just to open it up to other operating group managers. Any thoughts on the nuances and the differences between different types of software businesses you might acquire some of which may be things more like tools, things which may have a higher quotient of IT services?

Yes. I think in certain markets, certain -- I have to say, in certain geographies, the markets are different as well. So we're in certain countries, people love to have lots of services around. So the market is at a different stage of maturity, let's say. So it's not particular that we try to say held down lower recurring revenues and more services is simply the characteristics of certain markets. And then if you want to play in those markets, you think you can find solid businesses we're still interested, just to give you an example. And I think the other things that I think Bernie just already elaborated on this.

Great. Another question actually directed to you, Robin. Has CSI or other groups ever interfered with any acquisition that Topicus wanted? Would you expect that to occur ever?

For sure, we once in a while have discussions if something fits somewhere else better, but there are relatively rare on the total. And within the system we use, we think we should pursue a certain acquisition and we pursue it. And if we think it doesn't fit us, but it might fit another roof for whatever reason better, we take that into account. But I think all the routes are pretty much in the similar kind of businesses. I think a lots of the companies we like to pursue, we try to pursue them. But again, we have, in the past, handed over a certain company to one of our sister groups because it was not for us, but we could find reasons why it was for them as happened the other way around as well. But again, there are more exceptions than whole [day] on my desk.

Right. Some operating groups seem more willing than others to acquire shrinking businesses with negative organic growth at valuations are low enough to generate an attractive IRR. Would any of the operating group managers care to comment on their willingness to do so?

I mean I can say we're really -- in the end, you want to just make sure you're making a good investment, right? And since we buy and hold forever, you just never know what ultimately the outcome will be for that particular business and what opportunities you might see to expand your presence in their customer base. So I think it makes sense to consider both. So it's really giving a good return for our shareholders and some businesses that's going to come through growth and some of it's going to come through stopping doing some things. But eventually, you have the optionality of potentially changing the outcome of that business after it goes through that potential shrinkage portion, of course, its short-term performance.

Fair enough. And last question in the section. As CSI considered using TSS style noncontrolling infrastructure with smaller investments, either to increase your win rate or to increase seller retention, we have seen other high-performing [serial] acquirers do this.

I can take a stab at that. Every acquisition's viewed individually and sometimes it makes sense. So if it's a company that makes a lot of sense to add to the portfolio and the only way to get a deal done is to do something like that, then absolutely. And sometimes, we do structures that basically get the same economic outcome without necessarily having a minority interest. So earn-outs are one thing that I can think of that you can extend and earn out and make it feel close to something like that. So there's different ways to achieve the outcome. And I think what we want to do is just analyze each opportunity individually and make what we think is the best overall decision. And sometimes it will work. Sometimes it won't. But yes, for sure, if it's the right acquisition in the right vertical and everything else, then obviously, we would take a hard look at it.

Great. Thank you very much. Over to you, Howard.

Right. Thanks, Will. So now I'm going to move on to the governance section of questions, and it's both about Board governance, but also about incentivizing employees, especially with the spin out as well. So maybe the first one, this is an interesting question. I'll pose to both John and Mark Leonard. Could you put it in place an incentive for shareholders to hold on to their shares for multiple years, like the loyalty share program at L'Oreal, maybe giving more ownership or dividends to long-term shareholders? Maybe I guess the tone of the question, the thrust of it is trying to ask about how do you think about trying to attract the longer-term shareholders you're looking for as a partners of CSI?

I mean long term and engaged shareholders are two different things. We would like to have engaged long-term shareholders. Index funds are no particular interest to us as investors, although we understand why they are interested in us as an investment. So the problem is coming up with the program that works for the kind of shareholders that we'd like to target without mistreating of the shareholders. So it's a challenging problem. And the branch system where you can pay for loyalty in some way, shape or form is interesting, but I don't think the evidence is in yet that it is a better system.

Makes sense. And on the -- this is more about employee ownership. And the question asks, is forced insider buying, and I'm guessing they're referring to the bonus plan, large enough to inflate valuations? And separately, they want to know how much of the free float do employees at -- own at CSI and also at Topicus?

Yes, I can answer that. Yes, I do not believe the value -- the number of shares that we buy from the bonus are inflating values. Back in the day, when the Constellation is smaller, we used to spread purchase over about 5 months to avoid that, then we actually instruct the brokerage not to try to mute the market, and they have to follow certain rules. So no on that. In terms of employee ownership, if you include Mark's family holdings, I think in somewhere around 15%. Excluding that, it's closer to 10% or 11%.

Pretty sizable. Is there anything different about maintaining investment discipline and spinouts than in an internal unit of CSI? Are there any long-term risks in a separating specialist talent from CSI into these new entities? So I guess asking if the structure of the spinouts causes discipline to differ or maybe not?

The spinouts all still play by the same guidelines that we have, both with respect to targeting acquisitions and using our hurdle rates and modeling. So that all stays the same. Where it might differ is just the way they make the acquisition structure. But everything else is the same.

Yes. It's fair and that was probably what I was expecting as well. So the next few questions are about succession for Mark Leonard, so I am going to go there. So the first question asks, John, if you can disclose it, what succession plan is in place from Mark Leonard?

I think the answer is no. We won't disclose it. It's obviously a topic of conversation for the HR Committee. And as discussed on a regular basis, but it's not for public consumption.

Fair enough.

But we have a tenured -- a very tenured team on this call today. I think every manager and they're following here has been with CSI for over 20 years. And there's a large amount of trust amongst them and respect amongst them. And it's a -- our preference would always be internal, and there's a selection of candidates for that purpose.

Yes. And I think back to that culture study that Larry did a number of years ago as well about that. So on the succession topic, this is now to Mark Leonard directly. So this person is trying to find out more. If you're willing, can you envision retiring? How long do you envision staying in your current position? And how do you envision the scenario after you retire? And I guess they mean with CSI.

That will depend on circumstances. Obviously, if I'm healthy and have nothing to do with my time, I'll hang out for a long time as long as the Board wants me to. And the opposite is also true.

It seems like you're in the Board's good graces so far. The next question is, I'm just going to throw it out there. It's an interesting question. This is in this questioner's view about [indiscernible] stocks. So this person asks, "secrecy reduces copycats but increases CSI's status". [Indiscernible] stocks are unthinking, non-diverse momentum plays with extreme valuations, which don't end well. What negatives could you disclose that would increase selling and shareholder diversity, strengthening the company long term? And I guess they're trying to ask about their view of these [indiscernible] stocks and how could CSI stay straight away from that, given that it doesn't want to -- at the same time, it doesn't want to have copycats?

I don't think that's a useful thing on which we can comment. Apparently, markets are voting machines in the short-term and weighing machines in the long term, and we've been in the market for a very long term. And presumably, the stock price is at its appropriate level according to the market.

Yes. This question is about Board interlocks and it's addressed to, I guess, the -- to Robin, but also John. TSS/Topicus really Board Directors also sit on the CSI Board. These are called interlocking directorates and usually a red flag for bad corporate governance. Topicus pay CSI royalty has JVs with CSI and even potentially competes with them for acquisitions. Do these pose conflicts of interest for a director on both Boards? And how are any conflicts whether real or perceived managed? See who wants to go first, Robin or John.

Maybe I'll...

Yes, go ahead, Robin.

Yes. I mean, I think we touched upon this topic about competition for M&A before. So I think that has been answered, I think, two or three times. So they wouldn't have been different if there wouldn't have been a spin out. So there is no difference at all. I, myself, am a shareholder in Topicus, and I'm a shareholder in Constellation. Clearly, my shareholding in Topicus is a little bit larger. But -- so I don't see really issues there. And if there would be conflicts, then we clearly address that in the Board, if there would be any. And so far, we haven't had that. So we're seeing what is at the beginning of January 2021. So we haven't had clear issues there.

Yes. I think that's true. There's been no real conflict, Howard, and there might be some perceived confidence. But the other nuance here is CSI is a major shareholder of Topicus. And I think a lot of the situations you're referring to would be different than the situation we have here.

Yes, with the super voting share structure as well. This question also asks about the directors of Constellation and as well, what they're doing outside of CSI. So it says several directors of Constellation are involved in their other public -- in other public companies, I guess, sitting on their Boards. Directors are certainly entitled to their own lives. But if their skills are being applied to other businesses, conducting M&A, is their opinion at what point does it become a conflict with their duties at Constellation, especially if there were acquisitions being made that are potential targets of Constellation's operating units? Do you try to make sure that any directors you're recruiting, especially external ones, maybe aren't part of Boards that are in other acquirers, tech acquirers? Do you have any policy around that? Or is that just -- is that up to the Board's judgment?

I'm happy to start on this one and then other Board members on the phone are happy to jump in after me. Yes, I mean a number of us do serve on other Boards. And I don't think it gives rises to conflict. I mean one of the main reasons I do it, and I'm sure the other members do it is a learning process. So we're one type of serial acquirer that has a certain value proposition that's done phenomenally well and one that we thoroughly believe in. And part of our interest in other companies is they do things differently, and we can learn from that. And so we view it as a net positive. We have no formal policy with respect to that, and it's based on judgment on each director's outside interest.

This question also asks about the number of directors. So I remember last year, there was a resolution to increase the maximum size of the Board. But this year, the number of directors actually running were reduced for both on CSI and Topicus. So this shareholder wants to know why they were reduced? And is there an ideal Board size? And I know we talked some about that a bit last year, but if there's any change in thoughts around that? Also, the shareholder poses an interesting question. If CSI and Topicus were privately held instead of public, how would their Board composition differ?

I'm happy to start for Constellation and then Robin or Mark can jump in after. And there are a couple of questions in there, I'll try to remember them all. But the -- specifically with respect to the number of directors for Constellation, it evolves and it changes yearly, as you know. And there's a number of priorities and criteria that the Board is looking at. This year, in particular, we wanted to maintain a certain level of independent directors on the Board, and we had to make some changes in the number of directors to accommodate that. And that was, hence, the reason for the change this year. The ideal Board size, I think Mark has alluded to this before. I mean, the most important thing is that the directors on the Board are bringing a diverse set of skills and they're able to contribute, and we think the Board's size over the years has definitely led to that. And then as you're aware of as well, there's a number of subcommittees that take on specific responsibilities on the Board and allows Board members to participate that way. I think your last part of the question was, if we were private, what would be the ideal Board size? And it's probably less is the answer to that, but that's more of my personal opinion than probably some of the other Board members. I think, Robin, do you want to now address Topicus?

Yes, sure. So I think we have a dual structure in the Netherlands and in Canada, and we need the listing, and we have to be compliant, and we want to have a diverse Board, and we want to have competencies in all the things I think John just mentioned. And then always it's the debate, as John referred to, what is better a large Board or a smaller Board and having people with ownership on the Board. And there are all kind of routes you can go. And I mean, I was very fortunate to have great Board members in the previous setup and still have in the current setup. I choose to go for a slightly smaller given the size of our company and where we're at. So we're way smaller than Constellation is. And I personally always liked a slightly smaller Board. But still, of course, you need to have the competencies and the diversity in. So we take it into that account. And we simply try to see if we can make the right steps with a smaller Board given the structure we have at Topicus and the size we have.

Do you find that the Board size is also a debate about skill needing the right amount of skill sets versus not being too inefficient with meetings and et cetera? What's the things that you're trying to balance when you're thinking about Board size?

Yes, we try to balance a few things like you said. So have efficient meetings, have effective meetings and being able to discuss the right topics. And again, I can mention a few pluses and minus for a large Board, and I can do for a small Board. But I think we -- as Topicus, we've given our size and given our ambition, we try to be effective and efficient. And of course, we want to be compliant and have a diverse set. And I think we can do that with our current setup. And of course, we will evaluate over time. So I think pre -- I always had -- I was the only operating group who had his own dedicated Board because -- we had [indiscernible] shareholder, so I already had the Board. And then suddenly, we jumped from 5 to larger and now we try -- with a dual structure. And so that's why we try to end up somewhere now a little bit more in the middle.

Does anybody else on the panel want to comment on maybe their experience. I know some of you have sat on private Boards or are sitting on private Boards and how does it -- what are your thoughts about Board size and what a sitting on a private company differs from a public company?

I mean I would add really similar as small is better. You just want to make sure you also have people on the Board who actually understand the vertical you're in, the markets you're in, even if it was a horizontal, of course. And I think that's very, very important. So you can sort of -- in our case, I think with Robin's Board and [indiscernible] Board, combination of people with good sound investment discipline as well as some knowledge of verticals. So I think that's really key. And I think that really matters in a private Board as well. So at least my experience has been nice.

And I think you also uses -- observers as well and CSI ...

Yes. Yes, we have two really great observers. Dave had an event recently, and -- but I got to spend a bunch of time with them. Yes, they're wonderful. They have decades of experience in the space. And they're really good sounding Boards for us. A lot of acronyms in the telecom space, in particular. So I'd say if all of the verticals are in is the most acronym oriented what I'd have to say. So it's nice having people who can do the acronyms of acronyms and sort of say what it actually means when you're talking about something. You have the experience that you are actually working inside of customers, so it's terrific. So I'd advise that as well, for sure.

Yes, the knowledge pool is so deep and you definitely have a handbook for all the acronyms.

For sure.

So this question is about incentives. So going back to that, do you think or wish that CSI had incentive organic growth more in the past? I think the formula is still based on net revenue growth. Is there a plan to change this? And what could the opportunity be?

I'm running an experiment, Howard. So within Topicus, we have three operating groups. TSS Public and TSS Blue, and we have the Topicus Operating Group. Topicus Operating Group was historically very strongly focused on organic growth, and we implemented our Constellation bonus team for this company based on organic growth and not on net revenue growth. It's an experiment. We monitor it. We like to continue them doing what they did very well in the past. And so we try to implement it on organic growth for them.

And how are you finding that so far? Is it too early to tell? Or how many years do you think it will be before it qualifies as an experiment that you can take away with learnings for the ...

Yes, I'd like to follow it a little bit longer. We also see that they love to do acquisitions, and but they also like to clearly continue growing organically. So I think it's too early to judge. It's just following up and reflect upon it and see if it worked out or not. But as you know, we love to run experiments and this was a very practical experiment when the Topicus Operating Group joined forces with TSS.

[Indiscernible] is also looking at a program where we more heavily wait organic growth. It isn't something we're implementing right away, but it's something that we have in mind for next year. And we haven't yet run it by the HR Committee, but we've had lots of discussions about it.

And when you -- maybe just follow up on that and when you wait something more towards organic growth, is the thought as well, how do we make sure that the capital spend on trying to chase that organic growth is not too much? Or does that just get balanced out by the ROIC measure? Or do you have to put in other safeguards when you start waiting towards organic growth?

So if you got ROIC in there, then you've got a counterbalance. So if you focus on some sort of EBITDA margin, you've probably got a counterbalance. Ideally, you also track your major initiatives and look at the IRRs on them. So there should be multiple checks and balances in the system.

All right. My last one in this section is a shareholder looking to check in with the shared proposal last year about the racial equity audit. So last year, the conversation saw greater than majority of support for this. How has the company responded? Any commitments to conduct an audit or otherwise enhance diversity program disclosure and also any concerns about the proposal to know we spoke about before, but maybe a year after, it would be interesting to hear your thoughts.

I'm happy to start and then perhaps I'll pass it off to Jeff Bender, who's leading our efforts in this area. I think over the last few years, there have been a whole host of various shareholder proposals, not only to Constellation, but a lot of other companies. And I think we've stated in the past that we obviously take those seriously, and we're balancing those with the autonomous nature of our organization and also the global nature of our organization, which has employees in well over 100 countries. So last year's proposal, I think, was one of the proposals that led to the launch of an ESG website for CSI, which goes through all the various initiatives that are being done at CSI in this particular area. And if you haven't had a chance to go there, I encourage you to go, and it goes through some of the holistic things that are being done at CSI. But more importantly, some of the initiatives being done at our hundreds of business units globally. So that's what's being done on the aggregate level for ESG. And perhaps, Jeff -- Jeff who's leading this effort, I don't know if you have anything else you'd like to add.

Thanks, John. No, I think, I mean that was a good summary. So I think we continue to work with the operating groups, with all of the businesses, sharing our best practices, sharing our learnings, collecting more data. So I think we did actually a big push for over the last little while on getting better metrics around our carbon data. But I think, as we started getting in some of these metrics, it just definitely caused us to pause a little bit to make sure that we're measuring the right things, we're recording the right amounts before we start disclosing. So I think we'd like to do we take the proposals from everyone, including shareholders very seriously. And we -- there's a lot of activity going on behind the scenes. I think what you will continue to see, though, is we will be very cautious before we start posting the information to make sure that we're very comfortable that it is accurate and reflective of our true operations versus just trying to put something out there to tick someone's box to say we put it out there, we have not done that. And I think as long as I'm the one leading it, we will continue not to do that, although there is a lot of pressure. So I think sometimes you have to remind yourself what we're doing and why. But like John said, I think if you -- I would encourage you to go to the site, there is a lot of information out there. We did update all of our gender and our ethnicity data for 2022. So you can see all of our data that's there. Within the different businesses and the operating groups, there are so many programs ongoing to again, to record, to improve things. But again, it is a business unit specific focus. And I think -- this, I think, is the hardest part, I think, to reconcile with a lot of shareholders who I think are perhaps more used to dealing with single entities that are in control of that agenda where that is not the way we're currently moving forward.

And maybe just to follow up because you were measuring and leading the effort, when you think about the measurement from each of the business units having to get the measure and send them the data, how is that process? And do they all have to get on one reporting system to send the data up? Like how did that go?

Yes. So I think it's an evolution. It's a journey. I think, as we've said, so I think we are going to hire an ESG analysts, I think they start helping us just coordinate and consolidate the data across all the different groups because, again, with over 1,000 business units, again, there was just a lot of data. Right now, I think we're using Excel to sort of record and we have templates for all the different metrics, whether it's gender metrics or ethnicity metrics or vertical carbon. The other ones are more story related. So again, those come up from the businesses. They're less in need of auditing. But all the other data, again, we're just collecting the data and then putting it through sort of not an external audit filter but an internal audit filter, just like we do with any of our information to make sure that we understand it that it's accurate and it's reflective of what's actually going on and then trying to turn it into something that actually makes sense to be consumed by our stakeholders. And I think that also can be a bit challenging. So we paid -- just like we learned from other big conglomerates, we learn from each other on best practices. We are also spending time learning from others on how they're choosing to approach ESG and how they're disclosing things and trying to pick up best practices from others who are leading the way there as well.

Yes. Thanks for fleshing that out. That's it on the governance side, and I'll turn it to Larry.

Thank you, Howard. Thanks very much. This is the final segment, and we've called it learning, so it could include just about every topic under the sun, and it might. We've subdivided this into four or five areas, big picture, smaller picture and get ready for this one, artificial intelligence. We've got a bunch of questions on that. VMS Ventures and then some final questions directly to Mark Leonard. So first with the sort of big picture. One question came in this segment came in from the chat this morning. What was one good business idea you had for Constellation that was destroyed in the past year? The biggest great idea you had for Constellation that was destroyed. Very little destruction this year. Anybody intrigued by that? Now I'll throw this one in. Mark Miller talked to quadrants about the dangers of Hubris -- this question. How does -- how can Constellation prevent Hubris given its considerable success in the past?

I think like -- yes, it's a big concern, as I mentioned to you at [quadrants] Larry. I think it's really keeping yourself grounded in the sense that by the decentralized nature of the business, if you look at all of our businesses and luckily, we've been, I guess, exponentially increasing a number of businesses and a number of peoples at constellation realize that there's a lot of work to be done to improve. I don't think -- I think our best leaders come out at the end of every year and sort of feel they could have done better. There's just more things to improve. And every business we have, even the best-performing businesses, can do things better. So I think it's just keeping yourself grounded and looking at where we were. In fact, if I look back in 1995 when we were sort of the first acquisition of Constellation, just knew so little as to what I know now. And I think people to believing that, there's more to learn than they already know all the time is really key. And I think our best leaders do that. And I think that by measuring the business at a business level. And in our case, people wear their numbers on their name tags. It's very grounding for those leaders that can't let your ego get in the way on a consolidated basis is because there's a lot of work to be done. So I just say stay grounded, look at the -- look at your businesses, and there's just so much work we have to do across the board to improve.

Anyone else care to comment or happy to treat that that's a comprehensive answer.

One of our group CEOs, he displays at his academies different cases from the past where companies who did very well and went into the wrong direction, and he airs that on stage. And just to learn from it, where did it go wrong, what happened and whatever. So it's just something which came to mind, but to see that like Mark said, to stay grounded, lots of work to be done. And you have to work each year again.

Thank you, Robin. And this question is, it says for each of the operating groups, one [indiscernible] partner from two different people. One, what's the biggest thing you learned from to keep your capital initiative? And two, how is decentralization of M&A going? This person thinks that Volaris seems to be the most advanced on that with some operating groups issuing smaller hunting license. And this holder would love to hear about how the operating group managers are approaching that evolution.

I can at least comment on the behavioral change because a lot of people who have been, I guess, provided the keep your capital opportunity. So essentially, you do see a behavioral change in those leaders who would sort of tell you they're working on M&A. It isn't with all leaders. Some leaders will do it anyways, but it changes their behavior to allocate capital definitely. And you see it in other actions because I -- clearly, we didn't use it in the early stages of ramping up our M&A investment at Volaris. And as we introduced it and we pushed it further and further down, everybody gets it. They talk about it, they think about it. It matters, and it creates a joint focus from some of the goals that were mentioned earlier here to deploy out your free cash flow. Everybody sort of shares that initiative. And I think that's something very hard to do when you're decentralizing M&A as we have throughout a large organization that operates in dozens of countries. So it's a common tool that's worked very, very well for us. But I definitely have seen -- seeing it changed leaders fundamentally in the way that they think about approach it and then the organization they surround themselves with because they got to solve the problem. They need to make sure they're structured in order to solve it, whereas it isn't something that the central group is sort of having to worry about it's really their problem. So it just really hits home on that. So I'll leave it at that.

Larry, I think I can comment on the decentralization of M&A. So I mean, clearly, again, it's a journey like everything else. So as you bring new people into that focus, whether it's to keep your capital or some other way that you bring them in, I think learning how to deploy capital the way that we want them to deploy capital be this disciplined deployer of capital. It just takes time. So I think we do a good job within groups and across groups of again sharing our best practices. We have -- I think we've spoken before about our PAR, our post-acquisition review process. We have an MPAR, mature post-acquisition review process. But fundamentally, doing -- making investments and doing transactions, this is how people really learn. They learn when they do it and they do it well. They really learn when they do it and they do it poorly, and they make assumptions that don't pan out. And so I think, really, it's building our structure to make sure they get as much coaching and mentoring and sharing and then the opportunity to actually make investments and then have to be responsible for these businesses post to make sure that we earn our returns. And I think it's just a -- it's a journey. I think it's going well. I think if you look at the way that Constellation has scaled the number of people who wake up every morning either with a capital deployment target of dollars is quite exceptional. And I just think, again, we always have people at all different phases of the process, right? We have expert deployers who have been doing it for decades, and we have people who are literally just learning and just starting out, and it's quite the ecosystem.

Excellent. Anybody else? Incidentally, we are coming -- so I guess the final 12 of the meeting, it's a quarter 12. But we still -- we had 725 people in the meeting. So thank you for participating. That's a record number. Next question is about, we touched on this a little bit earlier, but this is -- two questions that are quite specific about how you proliferate best practices in terms of scale and reach, in particular? Do the best practices that you learn from a large business unit transfer to a small one? And do the best practices in one geography to translate to other geographies?

I can take a shot at that one, Larry. I definitely think they transfer between geographies. I really do. I think one of the challenges we've had early on now that we've gotten the largest easier is just putting those in the local language as well. So that's pretty key to transferring them across geographies is communicating in their native language, I think. As far as from different sizes of businesses, it's one of the things that I wish I've done a better job avoiding in the past because I think when you're sitting down with talking to the head of a large business or let's say they're head of, well, just use marketing, and they happen to have 20 people in marketing just because the business is large. And they're coaching someone who has one or two people in marketing, it's just different what you do every day, how you spend your time, where you can spend your time, how much money you have to invest in sort of covering the market, what have you. So I do worry that some of our large businesses and smaller businesses don't -- shouldn't hang out that much together, and it's something we need to be wary of just as a comment. So -- and some of the things we try to do in the future is to try to keep them separate as possible, just different. I mean, just being coaches, coaches, coaches in a business is different when you're -- when you are the person who has 3 or 4 developers working for you running a product. So I think there is a difference between those two.

Yes, Larry, I believe they can be transferred to other geographies, but sometimes you need to twist and turn them a little bit for the local situation. And sometimes it helps when some experience is also local and people can address it in the same language, let's say. So let's say, the best practice itself with a twist and a turn is still there, but it helps if you can, let's say, localized a little bit.

Excellent. I've been to a few annual meetings this year, and I don't think any annual meeting would be complete without commenting on artificial intelligence or artificial stupidity is sometimes might see. So we had a lot of questions on that topic, and they're posed in a variety of ways. But -- and we'll just be able to ask a couple of them. And I'll start with the ones that are that came in this morning. So first, do you think AI poses a structural risk to the software companies long term? And does that affect the addressable market for CSI to make acquisitions? I used to be a law professor and I'd ask a question not just call on people. So I'm going to ask John Billowits. What's say you sir?

Sorry, can you layer out stage? I mean, they're my AI or my other brain was going. Can you just repeat the message?

Yes -- and there are a few of them, so I can ask several more as people cogitate on this. This one was, do you think AI poses a structural risk to software companies long term? And does that have an effect on your funnel, your addressable market for acquisitions?

A little unfair to ask me, I think it's more of a burning question, but I'll start off. Yes, I think there's been a number of these kind of, I call it, structural risks that have happened over the last 30 years, and there seems to be one a decade. And what tends to happen is they tend to evolve much slower than I think people think they will. Nonetheless, they do change a dynamic, particularly in the technology spaces. And so it probably will have some impact, but my overall remark with respect to that question is it's likely to have less of an impact than people think that it currently will. Maybe Bernie can give some perspective on what they're actually seeing on the acquisition side.

Sure. There was a lot of silence there because there really isn't very much to say. We haven't seen any impact on our funnels on businesses that we look at. Will it happen? It's possible. I'm not going to predict the future. But AI will be infused in some businesses and will not in other businesses. Whether not it has an impact on us in the long term? It's possible. We know that in our verticals, customers take a very, very long time to switch off the software and go on to the next shiny thing just because it's just so difficult to get off the software and use something that may not have all the functionality that you want. So that's the attractiveness of VMS, whether AI is going to change that? It's very hard to predict, but I think we're a long way off from there.

Yes. One of the other questions to try to make that delineation between, say, mission-critical software, which would survive and the tools and other features that might be supplanted in some way. Well, good. I think that's fine. Thank you very much. So let's move on. And here's a question for Robin about topic is the shareholder says they're seeking broad reflections on what you've learned, what's worked well and what's worked -- what hasn't worked, and the most valuable lessons you've gotten since the merger and the listing?

So some reflections here. What will dwell and what didn't? I think the listing itself worked the spinout, spinoff, whatever you call it, works. I think with the transaction now, it was the second spinout. So I think the whole concept of the spinout, it worked. So that's, I think, a positive. What I learned from it is took a lot of time when we set it up, it was studying other spinouts and trying to put the concept together. I think Mark was leading it, but I discussed with him for a long period of time. And then I think the first spinout was still a lot of designing while trying to fly. And I think that made the second spinout between brackets easier. I know that David refer to it. But I think that's spinout out worked well. And I think we have been able to put Topicus.com as we planted with 3 operating companies, which all have their own history and their own ways of doing things. So I think that worked out as well. And what a learning is, it always takes time. I mean, the questions came with larger transactions, but Topicus Operating Group was a larger part, one of our largest acquisitions. And it's a stand-alone part now. So that's different than normal acquisitions. Some cultural aspects, they also do things differently than TSS did. It is not necessarily good or bad. It's just and -- trying to learn from each other. It takes some times, but I think we get there. But some of these things take a little bit longer. I think that's an important learning. And I think for the rest, there's also a lot of things are just life is going on and we do all things we did before. So you spend a lot of time. And of course, during COVID, when we did the spin out, but now we simply are doing what we did. And I think we have shown strong growth. The large spinout helped. But also, I think what important was as well, we didn't want to distract our businesses by doing the whole process, and I think that worked out pretty well. So I think managing that whole spinout and not having an effect on the operations, not having an effect on our M&A., I think that works out pretty well. So these are things, Larry, that come to mind now. I was not prepared for this question. So maybe tonight, I come up with some other elements, but these are my first thoughts.

Well, thank you. Sometimes, you get the greatest value out of just what comes to mind without the prep. So I think it's very helpful.

I think, Larry, what we're checking is what's changed, yes, the Topicus Operating Group joint. I said already something about it, but we do acquisitions all the time. We might be listed now. But for the rest, nothing really changed to the essence of our business. We still are doing what we did. I think, so you always wonder and that might be the background of the question, it's something really big in a change? No, it didn't. We still [indiscernible] vertical market software companies. We still try to make them better. We're still trying to exchange learnings. We're still part of the Constellation ecosystem. The only difference is we're listed.

Excellent. Thank you very much, Robin. We've got a bunch of questions on VMS Ventures. And since we're running out of time, and they were all very similar. So I'll simply put it. This is to Mark Leonard. I think, Mark, is there any update that you can provide on VMS Ventures? Are you seeing ideas emerge? Anything that you can share?

We've made three investments so far, and we're sort of refining our audience in terms of the people that we talk to within Constellation. We have a suspicion that recently acquired founders are a potentially burdened source of ideas and opportunities. And other than that, it's still very early days.

Good, good. Thank You. This might be for you, too, but others, our global operators. This is a question about cultural -- national cultural barriers to entry and that this came in this morning and it says, why is it so difficult to enter the Japanese market? Is it really that hard making a Japanese owner operator think differently think as CSI does? Are there other countries that present similar barriers to entry for Constellation?

Larry, I think the -- I won't specifically comment on Japan. I think Japan is probably pretty unique compared to the most geographies. But each of these geographies are different, and there are a lot -- more a lot different to what typical North American companies. So I think you need to address each one. Some will be more fruitful for us than others. And I think having local presence. And now that we've got scale in a lot of these countries where we can have other local businesses, I think we've got a huge competitive advantage moving into some of these markets that we've moved into.

Thank you, Damian. And I think the last few are, they're directed at Mark Leonard. The first of these is that you once said that one of the few lessons that stuck with you from business school was [indiscernible] law of constant concern. This person went out and tried to research just came up short or empty it. So they want to know, can you elaborate on this principle? And why it has stuck with?

It was a case about working capital and the [indiscernible] law of constant concern was that you wanted to have financial risk and business risks equal constant. And so if you jack up financial risk, you want to have lower business risk and vice versa. That was how I remember it. I haven't try to look it up on the Internet. But sure there wasn't Mr. [indiscernible] at some point.

Excellent. Thank you. Mr. [indiscernible] wrote a book called Super Forecasting that you have recommended. It discusses the inherent difficulty of making even short-term forecasts. This person wants to know has Constellation got much better doing that at forecasting IRRs over time has the growing scale of this acquisition? Database been helpful to improve its ability to do this.

[Indiscernible] has the numbers. But basically, on average, we're terrific in particular, with terrible. I think is the headline.

Beautiful. Third and second to last question today. You have been a keen studier of other business models, perhaps a keen student of other business models, particularly other HPCs, high-performing conglomerates, and you've discussed these in your past shareholder letters. Are there more recent lessons, good and bad from observing and studying other businesses that you can share?

I'll tell you what. I'll throw out a challenge to whoever posed the question and anyone else who wants to participate. Study [indiscernible] and study Veva and send me your thoughts on them, and I'll post my responses on our website regarding those two businesses. Both great vertical markets software businesses that I think have lessons for investors and software practitioners.

I love that challenge, Mark, and I'm sure you're going to get some good submissions. There's still 730 people listening to that challenge. I hope you will execute on that. And the final question, we've now gone one minute over. So this is the last one to Mark. Would you consider writing any more annual president's letters? Shareholders got tremendous value from them as well as in joint?

Yes. When I've got something to say, I, for sure, would create another president's letter.

Okay. I think there's an implication in that person's view that you have something you say, but no pressure, Mark. Well, with that, the Q&A has ended. So I want to thank all of the people who sent in questions and to the panel, we will address them and to my colleagues, my fellow moderators for collating them. And so I now would be delighted to turn the meeting back over to Mark Dennison and/or to Computershare.

Okay. Thanks, Larry, and thanks to all the shareholders for attending. That concludes the Q&A, and it also concludes the actual general meeting for Constellation and Topicus. So at this point, I'd like to turn the meeting over to Computershare so that they can conclude the meeting.

This concludes the meeting. You may now disconnect.