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 will be deemed to represent and warrant to Computershare and the corporation that you first obtained all required consents for their disclosure, recording, transfer and use of such personal information from all appropriate persons before your disclosure. During the meeting, we'll have a question-and-answer session. [Operator Instructions]. And it is now my pleasure to turn today's meeting over to Mark Dennison who will be acting as Chairman of the Annual General Meeting of Shareholders of Constellation Software. Mr. Dennison, the floor is yours.

Thank you, and good morning. I'm Mark Dennison. I'm the General Counsel and 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 Chairman of today's meeting. Jamal Baksh will act as Secretary of the meeting. I ask Shirley Tom of Computershare, Director scrutineer and compute the votes of any polls taken at the meeting. We are conducting today's meeting virtually via live webcast. Since the meeting is being held virtually, we want to outline a few logistical items regarding the conduct of the meeting. As indicated in our press release dated April 9, 2025, shareholders of Topicus, shareholders of Lumine Group and the shareholders of the company have had the opportunities 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 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 in the questions submitted in advance of the meeting or that are redundant or repetitive will not be answered. Any questions regarding procedural matters or directly related to the motions before the meeting may be addressed during the formal part of this meeting. When asking a question, 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 we answer, we will summarize the question and read out loud the name of the person who asked such question, and if applicable, the entity such a person represents. For the purposes of the meeting today, voting on all matters should be conducted by electronic ballot. Registered shareholders and duly appointed proxyholders will be asked to vote on each business item after the presentation of all business items. When you are asked to vote, you will receive a message on the virtual interface, requesting you to register your votes. When voting commences, the polls will be open for 2 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 has filed with me proof of mailing of the meeting materials, including the notice of availability of proxy materials in the form of proxy and where applicable the Notice of Meeting and Management Information Circular. The consolidated financial statements of the company for the year ended December 31, 2024, and the auditor's report thereon have also been mailed to all shareholders of the company who have requested them. 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 business of this meeting. The scrutineer has reported to me that we have at least 2 shareholders present by electronic meetings 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 holders and appointed proxy holders who are properly logged in with their control numbers or invite code after the presentation of all business items. The first item of business is the election of Directors. There are 9 directors to be elected at this meeting. The management information circular made available to shareholders contains information about the 9 nominees. Those nominees are Jamal Baksh, John Billowits, Lawrence Cunningham, Claire Kennedy, Robert Kittel, Mark Leonard, Donna Parr, Andrew Pastor and Laurie Schultz. 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 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 on 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 in the 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 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 previously mentioned, voting today will be conducted by electronic ballot. I will now take a moment to ask that the balloting 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 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. Please select the For or Against button next to the advisory resolution on executive compensation. The voting will be open for 2 minutes. Once the electronic balloting closes, the voting page will disappear, and your votes will automatically be submitted. The line will now be paused for a 2-minute period. [Voting]

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 being 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. We will now take a short break until 9:15 a.m. when the question-and-answer session will begin.

[Operator Instructions]

Okay. It is now 9:15. Welcome to the question-and-answer session. I ask that all attendees who would like to ask a question use their instant messaging feature of the virtual interface to do so. When asking your question, please include your name and the entity you represent, if any, and if applicable, confirm if you are a registered shareholder or a duly appointed proxy holder. I'll now turn the meeting over to Larry Cunningham, who will be leading the question-and-answer session this morning.

Thanks to Mark Dennison. Welcome Constellation shareholders. We have another sizable crowd, so far more than 400 people are signed in. Last year, we peaked out at about 1,000. Within that shareholder group, we have all of Constellation's Directors, officers and the managers you'll be hearing from during this Q&A. And before we dive into the Q&A, I'd like to introduce that panel. First, John Billowits, Chairman of the Board; next, from head office, we have these officers: Mark Leonard, President; Bernie Anzarouth, Chief Investment Officer; Jamal Baksh, Chief Financial Officer. And from the operating groups, we have all these leaders in alphabetical order, Jeff Bender from Harris; Damian McKay from Vela; Mark Miller from Volaris; David Nyland from Lumine; Dexter Salna from Perseus; Barry Symons from Jonas; and Robin Van Poelje from Topicus. I'm also pleased to be joined by our 2 cohosts, Will Pan of Ruane, Cunniff and Howard Leung of Fiera Capital. As background, Howard was an equity research analyst at Veritas covering Constellation from 2016 until 2022 when he moved to his present position at Fiera. The Canadian equity team at Fiera has been a Constellation shareholder for more than a decade. Will has been with Ruane, Cunniff for 15 years and a shareholder of Constellation for more than a decade. I joined the Constellation Board in 2017 and became Vice Chairman of the Board in 2019, and I've been a shareholder throughout that time. Howard, Will and I have been co-moderating this annual meeting Q&A since 2020 making this the sixth time we have worked together. We received many questions from a diverse group of shareholders. We've edited, trimmed and condensed them to avoid asking substantially similar questions posed using a variety of different styles, premises and so on. So if you hear a topic you submitted on, but it's not exactly how you raised it, that's why. We've designed the composites or chosen to duplicate submissions with an eye toward generating the most useful information. This is also designed to enable us to ask a greater portion of the submissions because of the sheer number of questions received in order to ask as many as possible, we may also skip over some duplicates that were answered last year. We usually end up asking almost all questions, but we make no promises or guarantees. We are prepared to ask virtually all questions submitted, except for those that would probe into proprietary matters whose disclosure would hurt the company and its shareholders and help its rivals or copycats rather than a company. As in previous years, as Mark Dennison noted, you can use the chat function to submit questions during this meeting, and we will periodically consult the chat to synthesize questions posed there under the same ground rules. And whether you submitted them earlier or at the meeting, we don't think it's going to be possible to pose all the questions. And if yours isn't asked, we apologize, but please note that you can use our website to post questions throughout the year. We publish answers periodically. We haven't shared the questions with the panelists, except in a few cases where that called for computation or involved personnel matters. We collated the questions by subject and divvied up the topics between the 3 of us and we'll take turns posing them as we've done previously. Here's the outline of the topics we plan to cover. First, M&A strategy led by Will; second, Howard will take up large M&A investments; I'll pose a series of questions on operations. And round 2, Will, will kick it off with technological innovation, including questions about AI, then Howard will close a series of questions on governance, and I'll wrap it up with a collection of questions that might be called [indiscernible] or unassigned in any event. So welcome, everyone, and I'd like to now begin the questioning with Will. Will, thank you very much.

Thanks, Larry. Thanks for having me ask questions again this year. It's an honor. So I'm going to talk about this section is about M&A strategy. And just to introduce this section, we're going to delve into the company's M&A strategy. We will ask about your strategy to grow by acquisition, the competitive landscape and the quality of the businesses that you're acquiring among other things. So to kick it off very broadly to Mark Leonard to start, CSI has historically been able to deploy the majority of its free cash flow and acquisitions that meet its hurdle rates. As CSI and its free cash flow continue to grow, does the company continue to have a long runway to be able to do this moving forward? And if so, how long a runway seems reasonable/predictable?

So historically, we haven't done a great job of predicting how long the runway is and so use that as context. And whatever I say, probably isn't based on great experience forecasting. When we look at the marketplace, I think we do a reasonably good job of covering and knowing about the acquisitions that happen in our space. And the amount that we succeed in acquiring does not feel uncomfortable to me. Now that doesn't mean that we're always the acquirer of choice. We lose far more than we win. And we end up having to follow literally tens of thousands of acquisition prospects. We're adding to that base every year of prospects that we follow. But the quality of the additions in our funnel is nowhere near as good as it used to be, say, 10 years ago. Ten years ago, it would have been vertical market software tightly defined. It would have been in geographies that we knew and loved. Nowadays, it tends to be much more far-flung geographies and it's less tightly defined. We will look at horizontals. We will look at hybrid software, hardware companies. We'll look at hybrid software data companies. You'll see that we're experiencing what investors call a style drift. And that's frequently associated with less good performance. So to date, we haven't seen that less good performance. We're still hitting the hurdle rates that we set, as we attempt to deploy our capital. And it's useful to put our capital deployment history in context. Over the last 4 years, we've deployed over $1 billion of equity in each of those years at what we believe are high rates of return. It certainly seems so when we deployed it, and we do track it every quarter thereafter, and there's no sign that it's deteriorating any worse than any previous vintages that we've seen. So just think about that, the average private equity firm isn't deploying $1 billion of equity each year at high rates of return. It's an extraordinary achievement. Implicitly what shareholders are asking as they ask if we can deploy our capital is can we double that? Can we deploy $2 billion a year at high rates of return? And I think the answer is, at some point, we're going to run out of runway, and we're going to have to find other places to deploy our capital, and we have undertaken with our shareholders that we will do that. We won't pay out big dividends, and we won't buy back shares, certainly not at high prices. And so we'll look elsewhere. Our style drift is going to increase over time. And it's something we accept, and we're exploring all the time. So it may not have nailed the answer, but that's what we're doing.

Yes, I think that will dovetail with a lot of questions that we'll get to over the course of this conversation and preempts many of them, but we'll dig into them deeper. One of the things that you talked about was deployment over the last 4 years. And the next question is an investor says they've noticed, and I haven't verified, that the number of small- and medium-sized acquisitions has flatlined over the past 3 years despite additions to your business development staff and M&A headcount. They also say the same is true of CSI's copycats. So they don't think this relates to competition. Why do you think this may be the case? And do you see ways to remedy that? And that's open to everybody. But...

I think we should get Bernie's comment on that. Do you have the numbers in front of you, Bernie, on the small acquisitions?

I do not, but I think...

Why don't you -- I'll fill the silence. So those have been enormously profitable acquisitions for us. They tend to generate higher rates of return. They have greater dispersion than our big acquisition IRRs. We want to keep doing them. They are expensive if you actually look at the cost of deploying small amounts of capital in many situations. It's nontrivial and something that we monitor and are concerned about because it will eventually hit diminishing returns. If you model up the cost of private equity, when it deploys capital, it spends on the order of 20%, 30% of the capital deployed on deploying that capital. When you factor in the carry and the fees over the period of time associated with the ownership, it's an incredibly painful toll that's taken on investor returns. With us, because we're buying and holding forever, we get to spread that cost of deploying the capital a lot further, and we're not spending anywhere near that amount to deploy $1 worth of capital. So yes, the rate of growth of the small investments is slower than I'd like to see. I think there is a siren song of larger transactions that tends to drag a lot of our capital deployers off into middle-sized and large-sized acquisitions, but I fundamentally feel that it's a place where we add enormous value. And if we can bang out somewhere between $500 million and $800 million a year of small acquisitions, that would be enormously good thing to keep on doing. And then it would just be a question of sort of what we pull in in terms of large acquisitions that will make the difference between deploying all of our capital or just a portion.

I'm curious if you allocate the cost to the smaller deals of all the activity and weigh that against the capital deployed, does it make the returns on the small deals more equal to the rate of return on the large deals? And do you find that the large deals are still lower return then even after you factor in the higher cost for the small ones?

So very, very difficult thing to do. I've modeled it and looked at nurturing cost per acquisition and then transaction cost per acquisition. You spend a huge chunk of the money that you spend on a pursuit in the last sort of 6 months of the process. But if you are engaged in nurturing for -- and we're looking at nurturing of many, many years, sometimes well over a decade. The Asseco relationship, for instance, was over a decade before it became a transaction, an investment. And so yes, nurturing costs add up. And so your question, I think, is a very good one. Do we have accurate numbers? No. Do we have a sense that we're still making higher rates of return on the small transactions or acquisitions? And I think the answer is yes.

Great. Bernie, did you find that information on the small deals?

Yes. I mean we're continuing to execute on the small deals. It varies quarter-to-quarter. You can have some good quarters and some bad quarters. But generally, we've been at a steady state. We usually use Cap IQ as a good proxy for the number of transactions that occur on an annual basis, looking specifically for VMS type of transactions. And that has remained pretty steady over the last 3 years. So it hasn't increased, it hasn't decreased. And so we're getting a share of that. Now Cap IQ doesn't cover all of the transactions, but it's the closest proxy that we've seen. So it's not like we've seen the market increasing dramatically. It's just been pretty steady. I've always expected the market to increase into the next decade just because of the baby boomers retiring and not finding successors and trying to sell their businesses. But I haven't seen -- so far, we haven't seen an increase in the number of transactions, but we still continue to maintain our focus on the small- and medium-sized businesses, and the large ones come in from time to time.

Great. Bernie, do you have -- one question is sort of generally about how the businesses you're acquiring today look versus the ones you were buying 5 years ago. Do you have any thoughts on that?

Not really. I mean we do see more horizontal businesses, and I think we do execute on more horizontal businesses. But we're still very opportunistic. And so whatever is out there that's available that we're looking to -- that is available for an acquisition, we will look at it seriously. And so I think maybe you'll see a little more of that, as Mark mentioned before. We're just looking in other places as well. So...

Okay. And a more specific question on that, a question or wonder is, is the underlying quality of the businesses you're acquiring today lower than those you acquired 5 to 10 years ago even if you may be getting the same or similar IRRs? In other words, do the businesses you're acquiring today require more, for example, shuffling or improving than those bought in the past?

I wouldn't say so. I mean on the fringe, you can see a fraction of the businesses always need a little bit more help than others. But I think we've been pretty consistent overall. I mean some places, you say, okay, maybe that business wasn't as good, but when you get it down to an operating level that we're comfortable with, they tend to last quite a while. These businesses are quite resilient. And so even some that are poor quality, meaning they're not going to continue to grow by 5% every year, maybe they'll grow 1% or 2% or even stay at zero, they'll still split out the cash that we're looking for. So from that point of view, that's what we're looking for. We're not looking for rocket ships that are going to the moon. We're looking for steady businesses, average businesses that bump along that we do the best that we can for our customers and the employees stick around for a long, long time, and they just produce cash.

A couple of questions about the current environment, including one that's coming in live about capital deployment. So I guess the one that's live is, why was Q1's capital deployment so much lower, particularly excluding spinouts? Should Constellation not be a beneficiary of macro volatility with M&A somewhat countercyclical? This dovetails with a question about the landscape for private equity somewhat softening with more challenging fundraising, forced redemptions, et cetera. And they're wondering whether you've seen any impact on competition for potential acquisitions in the near term.

Yes. Certainly, the competition has been increasing. It has been increasing for the last several years, both from copycats, from strategics and strictly private equity firms with their roll-ups. But I don't see Q1 as being any different from any other quarter. It's just a question of timing for some of these acquisitions. And I took a poll amongst the operating groups as well. I checked with the guys to see what was going on because I thought, yes, the volatility is a little odd and whether that volume should be increasing or decreasing. But everybody came back with, it's transaction-specific, some of them are just being pushed off for whatever reason, but there's no major trend across the board because of what's going on in the macro world. So I can't really point to it. Nobody can. It's just one of those things where it's going to differ from one quarter to the next, and it's just not predictable.

Howard, a quick interjection. I think if you parse our investments into 2 groups, into the large and the small, when times are good, I think we're more likely to see generational sales of businesses that are small, and the owners will prepare them for sale. It will be a 1- or 2- or 3-year process, and then there will be an opportunity for us to buy those businesses. And so there's an optimization that happens. When times are bad, they're much less likely to look for the onetime sale of the business they've spent their life building. So I think there's the opposite effect of what the questioner was proposing. Where we do see advantage in difficult times is buying bigger businesses. So things that are carve-outs of larger businesses that are either suffering in tough times or have made decisions to go in a different strategic direction or have axed their CEO and the acquisition he loved and which hasn't worked out gets sold, and so those tend to be trying situations, one where if we're successful, it's because we have the opportunity to add value and not just buying something that's big and beautiful and has performed great. And so that does require extra effort and is a distraction. But the rewards can be large and the capital deployments can be large. So those bigger investments are sort of the ones that one would hope for in these difficult times. And as to private equity overleveraged situations, there are a whole host of them. We've seen a number of them restructured, and hence, they've gone away. And that requires a certain leniency on behalf of the lenders. And sometimes particularly if they're nonbank lenders, they are more lenient than I would be in their shoes. And they used to call this extend and pretend, but I'm sure there's a much more polite term these days. And so we haven't seen the overleveraged PE deals come our way. And as long as the PEs are still in control of the situation, they'll keep on going as long as the lenders let them. It requires a lender to truly step in and either start a process or take control, and that is relatively infrequent. You can see it a little bit in the debt numbers that are coming out. The CCC-rated debt instruments are popping up in terms of a percentage, and we monitor that and try and figure out the obscure names and which software companies they relate to.

Interesting. Great. Thanks for all that. I have a number of questions now for Robin and others, but Robin to start. Robin, how are you seeing the competitive landscape in M&A in Europe? And how does it compare to 5 years ago?

Yes. So I think what we have been seeing in North America, we see in Europe as well. There are copycats coming up, and people try to see what we do, and they have -- they might have different styles, focus on different segments of the market. But yes, when I started off in 2006, competition was less than it is today.

Does anybody else who's active in Europe have any thoughts on this? This was addressed to more than just Robin. Maybe Jeff?

Yes, I think I mean to Bernie's point and to Robin's point, I think when I say it's more competitive now, it feels more competitive now, but we're such a different company now, and we're in so many different geographies now. I'm not sure it's necessarily a fair assessment. I think it's always been competitive. We've always done really well in certain parts of the market, whether it's the small owner manager who's looking to monetize their life's work and still create a legacy for their customers, their product and their employees. We've always done really well there. And I think to Mark's point, we've always done well being a great home for unloved large assets. I don't think any of that's changed, and I'm not sure the competition for those is a ton different. I think we just -- we try and play, I think, and I'm not sure if it's this back to the style drift that Mark talked about, but I think we're trying to play in more areas. And I think when we move into different areas, we see different competition. And so maybe that feels like a bit more competition. But when I look at what Harris is doing and how I assess our success, losing to competition or not being able to compete is not high on the list of the things that are causing us to be successful or to not be successful.

Great. Robin, you have a live question, which is, did anything change at Topicus recently or was -- has this just been the ebb and flow of M&A? They're amazed that you've deployed over EUR 700 million year-to-date.

Yes. I think it's just -- last year, it was one of the other operating groups, and this year, it's us. And like Mark said, one of those larger transactions we've been working on for a longer period of time, I think they just came together. So we've tried to do our stream of the typical transactions we do. And we had 2 larger transactions we've been working on for a longer period of time, and they then worked out. And so that goes a little bit like up -- some ups and downs through time. So I think you should not judge us on 1 year. You should judge us through time. And if I then take a look at our stats, then we have been gradually improving, and we had a nice start of the year.

The -- another question came in for you, Robin, which is that TSS has been hiring business development people in the U.S. as of a few months ago and in January completed a deal in Indonesia apparently. Is there a -- does that speak to a lack of opportunities in Europe at your desired IRRs?

I would see it more as people when we're -- let's go back in time. We started off in the Netherlands. And then when we joined Constellation, we slowly went to neighboring countries, and then we went a little further in Europe, and like that, it evolved. We're building out our business development teams. And we hired people with certain focus on certain areas. And one of them is that we're exploring a bit also outside Europe. So over time, it might go a little up, but our focus is still predominantly on Europe.

Okay. And the last one of this set for you, which is, how should we perceive the increase in noncore VMS acquisitions in recent months at TSS? And they characterize MoneyView and Dolist and hachmeister as more like information services or data providers or consultants, which is a little bit to Mark Leonard's earlier point about going more hybrid or horizontal. Do you have a take on whether those are fairly characterized and how investors in Topicus should think about it?

Yes. Well, some transactions are pure VMS but a little bit lower recurring. Other ones are very highly recurring, very attractive and very close to home and where we're active. And for example, the Topicus operating group, they are taking a strong look at data propositions. And we follow that. We track it, like Mark said before. And if we think it fits, we're willing to do it. And then we track it, and then we follow it. And if we think we're heading in the right direction, we might consider doing more of them if we like what we see and if we meet our hurdle rates. And also here, a few might have stumbled together in this quarter, but we might have a lower quarter next time. But we're exploring. I think it reconfirms what Mark earlier said.

Great. Thanks for all that, Robin. The next question is for all operating group managers, and it's about whether you've made any acquisitions that brought in your focus from core VMS into adjacencies like services or payments. And since we've already covered this at the beginning with markets, it's possible that everybody has, and it might be more interesting to hear from those who may not have, is there an operating group manager who feels like they really haven't broadened beyond VMS? Okay. So I suppose everybody has done it. And then maybe an experience with doing that, maybe, Barry Symons, Jonas and CORA, do you have any thoughts on maybe some of the things that you've perhaps done in adjacencies to core VMS software?

Yes. I would say the biggest thing we've been doing outside of core VMS is on the payment side of things. So I would say we're one of the larger payment processors in Constellation. And we believe, because of the nature of a lot of the business we own, there's a lot of payments opportunities in the businesses, so our hospitality businesses, our fitness businesses, that type of stuff. And so yes, we're definitely focused on payments, and we've done a couple of acquisitions in the space. We're looking at other ones, and it's something that I think can add tremendous value. And what we see from our competitors in this space is a lot of coupling of payments and software. And so if we want to remain competitive and be leaders in our field, we have to be better on the payment side of things. So we'll keep dabbling in that space and hopefully get better quarter-after-quarter.

This quarter, we profiled, well, one of Barry's companies, that is rapid growth profile for the directors, a grower every quarter. And that particular one had very high payments contribution. And it was a great example, I think, for the rest of the operating groups and business units that review our quarterly information and was a wonderful example of sharing best practices.

Great. There's an M&A question for Lumine that came in live. A common theme amongst the operating groups is competition for copycats and PE. Why is this seemingly less applicable in your vertical? And how confident do you feel in your 5- to 10-year investment runway compared to history?

In terms of copycats, yes, so yes, we haven't seen yet too many or any real significant communications and media vertical market software consolidators. And I think it's partially because of how specialized the space is. The barriers to entry from a domain knowledge perspective are pretty high. And so therefore, we really don't yet see any specialized copycats that seem to be more opportunistic across many verticals and geographies. It doesn't mean to say that won't change in the future. We just don't see it yet.

So David, I've got a question for you. We've obviously come across a bunch of PEs who have strayed into that space. They've often done fairly sizable transactions. They may not have had -- well, they usually have not have had the same success that you have. Do you foresee being able to shake loose from private equity any of the media and telecom assets that are tied up in that space?

Yes, for sure. I mean there's a lot of aged investments that we've seen over many years have come to market many, many times. And it's just -- it's the trigger point to get those assets really seriously on the market and at our hurdle rates that we can afford to buy them. So they're sitting there, and there's a lot of them, particularly in media. We've seen a lot in media the aged and problematic investments. We would expect they should transact. Predicting when is a difficult question, but I think there's a reasonably high volume of them in our vertical that we should be paying attention to.

Great. This one is to Mark Leonard. As an outside investor, how can I best judge the quality of the acquisitions you're making?

So I think you're in a tough spot. If we're acquiring over 100 companies a year, you're not going to be able to drill down into how we're doing with them. So the best you can do is sort of aggregate analysis. So look at the incremental recurring revenues each year and the incremental capital deployed and try and run those sorts of macro-level calculations, but it's a very difficult one. I think it comes down to trust. And we do sort of provide you with a sense of what our hurdle rates are and how we're doing against them. And if you believe us, that does give you some insight, but it's not like having a set of audited numbers on each one of our acquisitions. There is an acute thing I came across, which is in some of the European jurisdictions where they are forced to file financials, you can drill down and look at the financial performance of companies after they're acquired. And so you can get a handle on sort of how we do with those companies and, to some extent, how our competitors do with those businesses. And so that's an analysis you can do. But it tends to be time-lagged. The actual filings happen a year and a bit after the performance, et cetera, et cetera. So it's not a leading indicator. It's a fairly significant lagging indicator.

Great. And you may have anticipated this earlier, but the questioner asked, what would you prefer, lowering your hurdle rate or deploying less capital? And so my tweak to this would be, you don't -- you said earlier, you don't want to deploy less capital. How do you feel about the hurdle rates where they stand right now?

So we experimented with dropping the hurdle rate for both large- and medium-sized transactions. We discovered when we did it for the medium-sized transactions, it didn't result in significantly more capital being deployed, but it did result in lower returns. So that's a useful experiment but not one I anticipate redoing in the short term vis-à-vis the larger ones, it's obviously made us more competitive and allowed us to deploy significant chunks of capital. And as you point out, the cost of deploying those large chunks is lower than the cost of deploying small amounts of capital on small acquisitions. So it's something we'll continue to do. And I think we'll try and be as creative and contrarian in those large capital deployments as we can. Now as the capital piles up or if the capital piles up, that will be the true test, right? We will try some things, and we'll probably fail at some things, and so the rates of return on the failures obviously will not be good. And hopefully, we'll learn and we'll either get better or we'll stop doing that particular flavor of capital deployment and we'll move on to another flavor of capital deployment. We have some ideas. It doesn't mean that they will be great. Everyone and his mother is looking for places to invest billions at high rates of return, and if you happen to find one, let me know.

I think that's a call to everybody. And do you have any further updates on these efforts to develop capital allocation skills and areas beyond VMS?

So would I be willing to tell other people where to go find high rates of return on billions of dollars? No, the answer is no.

All right. I think that's a fitting close to my section here. I'm going to turn it over to Howard, I believe, for large M&A.

Right. Thanks a lot, Will. And same as Will, it's a pleasure asking these questions and getting to learn from the panel. So on the large M&A segment, it's going to focus on CSI's bigger acquisitions. So we got a lot of questions on Asseco and Altera. Shareholders ask about valuation, integration strategies and the impact these acquisitions have on the overall business. A common thread that they're all picking at is how these long-term investments, these large-scale investments align with Constellation in terms of its objectives and financial performance. So firstly, I'll direct this first set of questions to Robin. I guess we've got a lot of questions on Asseco. So just to set this groundwork first on the accounting valuation, this questioner asks, how should we look at the valuation of Topicus now that you guys bought a big stake in Asseco? This will be a big portion of net income but does not flow into cash flow from operations or free cash flow unless dividends are received. So how do you think about that?

Yes. So you won't see it consolidated towards -- because we're not going to consolidate it. Currently, you are trying to see how it all fits because we bought one part of Asseco, but the other part still needs to be -- get clearance. And then we will most likely have an equity pickup in our books. But just from the perspective, we see this as a long-term investment, a company we like and love to partner with for the long term. And we have no other approach than we have to other acquisitions we have. Clearly that we don't own a majority. That's not something we do each time, but the company has been built many, many years ago, and I think the founder, Adam, did extremely well in a different area of Europe and build out the company. He calls it a federation, and there's a lot of similarities with our decentralized model but also differences, and we can share learnings. It's one of those examples like I mentioned before, we work long on, but we don't have a different approach to our horizon and finally the returns we want to make.

So I know in the first quarter, there was -- you had to mark-to-market the investment because that's how the accounting is, but do you view that gain in the value of investment as part of the return or is it more the underlying net income?

We didn't sell it. It's on paper. It's not cash. So that's how I look at it.

That makes sense, yes, and we had some questions about that, too. And there's another question about this. When you acquire a private VMS business, you own it in perpetuity. Do you find the same -- do you find it the same way when you're acquiring 25% of a public listed company especially given -- I think there's a cap on -- as part of the agreement that you wouldn't exceed 28%. So how do you think about this versus a regular M&A?

Yes. But like I said before, it's not different than any other. So we see it as a long-term investment. Let's round it to this 25%. It will be our largest transaction ever. So it's big despite it's 25%. And important is that with our partner and the business they have and the area they're in, they're strong in different areas than we are. So I think it can develop into a mutual beneficial relationship. And again, we need to wait for clearance, but it's a big investment for us.

Fingers crossed on that. And it seems kind of similar to when you first bought Topicus, the operating group. There's a lot of learnings that you can use from Topicus, and so maybe this -- one way to look at it, Asseco, is that you can also learn from them and they can learn from you and be better acquirers on both sides?

Yes. So we can learn from 2 sides, and also the transaction itself, when we did the spinout in 2021, it was the first time we did it, and this is a different concept as well but in the space we like, and yes, that's what we like to do. And so far, it works out, and again, we wait to -- have to wait here for clearance.

And maybe opening up to the other operating group managers, do -- this questioner asks if any of the other OGMs make these kind of investments already and any considerations of doing similar Assecos where maybe you own a large minority stake, but there's a certain cap. Is that something that you've done already or potentially appeals to you? Maybe I'll ask -- maybe I'll start with Jeff because he's done some big acquisitions.

Yes. We have not, Howard, done what Rob and his team have done yet, although watching Robin and team as how they did it, I think we would also be willing to do that because we're still earning the returns that we're looking for. So I think if we had the opportunity to invest a large amount of capital in a great business, to Robin's point, over the long term, we are absolutely willing to do that irrespective of whether it's a 100% equity ownership or not. So I think we would be more than willing to follow along and do the same thing.

Anybody else want to comment? Right. So there's another question just to Robin about the other large acquisition in Q1 of Cipal. I believe it's -- given that the Cipal acquisition is a significant part of your business, questions have also been raised in the Belgian Parliament concerning this acquisition. Just the questioner wants to just get an update on the current status given the delays.

Yes. So we're currently going to the FDI approval process. And there are questions asked, and we provide information, and there's a discussion. There are the people of TSS Public who take care of it. Of course, I follow it. And we're going through that now. But we still expect that one day, I don't know exactly when, but that it might be a little bit -- takes a little bit longer than expected, but we're waiting for final clearance there. And the business itself, it resembles the business we have in municipalities, local government in the Netherlands, and this one is in Belgium. Belgium is not the Netherlands although it's a neighboring country. But from that perspective, we know the business pretty well, and management and the Belgium management is deep in the vertical. So it's an acquisition that fits well, and we would love to take care of that business for the long term in the interest of clients in the country.

Good luck with that. And well, this one is to Mark, so a more general question. This questioner asks, in the 2021 president's letter, you mentioned a majority of large deals were marketed by less than a dozen brokers and that CSI would focus on working with these brokers. It's been 4 years since then. Can you give us an update on these endeavors?

Yes. We track our broker relationships every quarter. We look at how we're doing with them and what we're seeing from them. I think we're much happier with how we're doing now versus 5 years from now -- or 5 years ago and think that they understand us better than they ever have. So I'm very pleased with the sort of where we've come to. Don't see any dramatic shifts but -- going forward, but we're in a good place.

And the deals are still concentrated by these large brokers, so the focus should still be on going to them or are there other kind of avenues you're exploring to find large deals?

There's large brokers, large deals, and there's small brokers, small deals. And we work the whole gamut, but for the large brokers and the large deals, we do have a focus group who stay on top of that and report it and manage it as you would hope you manage all your sales activities, so to speak. We're selling money.

The next questions here are about Altera, so it's directed to Jeff. And this person asks that given that Altera has a relatively smaller market share, is there a tipping point where attrition starts to accelerate because a lot of health providers want to be on a more interoperable program with greater R&D investments? How can Harris afford to invest the R&D required to keep pace with its competitors that have a larger maintenance base? And more generally, does management believe Altera can return to positive revenue organic growth? And what learnings have they taken from the acquisition so far?

All right. There are a few questions in there. So I think this year, for sure, Altera is -- will have a negative organic growth due to attrition that sort of was known at the time of the acquisition. We have a pretty detailed schedule of customers who have already made a decision and they're in the process of moving to a different solution. So I think we have good visibility as to what's happening there. Altera is a big business. There are a lot of customers who had made previous decisions to move to a different solution. So I think the strain on or the downward pressure on organic growth is significant. So I think it's significant in Altera as a business unit. It also has a large impact on the Harris overall results in terms of Harris' overall organic growth as well, reducing it substantially. I think from an R&D investment perspective, we still spend a lot of money on R&D within Altera. I think the key -- we talked about it actually on the Board call a little bit yesterday, Marcus and team, their focus now is on -- I think it -- my apologies. Hello? Amber alert. Their focus is on, I think, being relevant to a large part of the existing Altera base, which I think they've done a good job of continuing to modernize the solutions. And I think in Altera's case, it was changing the expectation and the quality of the delivery of the Altera solution. So I think Marcus and team have been doing a fantastic job, I think, realigning that and redefining what that is. But the key to Altera's long-term ability to grow organically or return to organic growth as a company will be finding those parts of the market where we can be successful and offer a differentiated solution that provides great value to the customers where we can capture a portion of that value. And that will not be competing head-to-head with Epic or with Oracle, the former Cerner solution. So we are in the process of -- we have lots of ideas. We've got toes in all kinds of water. We're doing all kinds of different things with existing customers and with new customers. But I don't really see it as we can't spend the R&D to be competitive. I see it as more where within the market do we want to spend our R&D dollars to actually create an enduring business. I would see that way. So still very happy with the investment. Again, lots of learnings, obviously large acquisitions with sort of over 5,000 employees around the world. Culture change and implementing best practices has taken us a lot longer, I think, maybe than we thought. There's nothing wrong with the best practices. They still work. It's just a question of, how do you get them going at scale in these very, very large organizations? And I think, Mark, I was at a presentation with Marcus actually last week. And he was telling -- sharing some stories with -- actually with the Perseus Group. And one of the learnings that he had also was part of our solution or part of our integration strategy with Altera was to take some existing Harris leaders who had very good experience in different domains. So let's take R&D as an example because that was the question. We moved over a very successful R&D leader, and she has done a great job, but I think understanding that her experience set is in dealing with employee populations or group sizes, in this case, of R&D of 50 to 100 people, and now you drop her into -- now she's dealing with 1,000 people spread across the world, like it's just a different way of going about it. So again, she's done a great job learning and adapting. But again, these are things that I think we've learned that if you ask us to -- when we first went in, were we thinking at that level? I think the answer was no, we weren't thinking at that level. Now we are. Now we understand it. Now we would apply those practices differently as we move forward with the next one.

Yes, it seems like it's a better strategy than going head-on-head with some of the -- Epic and others, so thanks for the answer. This one, next moving to David, and this one is about the acquisition of WideOrbit. So 2 years after, can you give some comments about what has exceeded your expectations and what has fell short so far? And can you also talk about where the growth potential is in the adtech space in the context of organic versus inorganic opportunities?

Yes. Well, the investment has gone very well. The business has continued to grow organically, and we've continued to consolidate our position with those major customers. We've had a number of contracts come up for renewals, the 5- to 7-year contracts, and we've been lucky enough to retain all the customers and with price increases in many cases, a sophisticated negotiation, of course, respectful negotiation. And the business has continued to innovate so that it can be perpetually relevant to those customers. And obviously, expanding beyond those customers into digital-only customers has been a focus. And that's where we see the growth, both digital with the existing base as they experiment and themselves need to remain perpetually relevant, they need to be in digital. Those digital-only platforms like Amazon, for example, is a real space where high-volume content, high-value content like in Thursday Night Football, for example, so sports in particular, command really good ad spend. So in those situations, WideOrbit has a very sophisticated platform that can apply with that large amount of ad spend. So as digital grows within the base and as we approach those high-value digital-only platforms, I think that's really where WideOrbit's future will be as we continue to look at sustained organic growth over the next 5 to 10 years.

It seems like a lot of the content buyers are there. And I know before, when WideOrbit was first bought, they had kind of a marketplace feature and kind of viewed it maybe as a free option. And any kind of -- does the digital space kind of blend in with this marketplace? And how is that doing so far?

Yes. I mean the market -- we've down-celerated a little bit on the marketplace product because as anybody who knows about marketplace is you need virtually everybody on board for it to be sustainable and profitable and that the industry is just not quite ready for that yet. We have the tech stack, and to the extent that becomes real in terms of large-scale adoption, obviously, we'll be there. So -- but there's lots of other areas for growth beyond that that we've accelerated as a result.

Thanks, David. And the next set of questions are more general about large M&A. So first, maybe start with Bernie on this question. Do you -- the questioner asks if you deploy a deliberate strategy to focus on large acquisitions based on trends you see. So earlier, there was some discussion about when times are good, these kind of acquisitions pop up, when times are bad, these maybe larger ones pop up. Or are large acquisitions more opportunistic or random in timing based on the ones you've done so far?

Well, I think Mark described earlier that we've made a real push in communicating with the brokers of the large transactions, the investment bankers. And so we've been included in many of those transactions and auctions. Very difficult for us to compete with private equity for some of the large ones. And just generally, it's just a difficult market out there. For us, some of the prices have really gone up dramatically. By the same token, there are some auctions where they just don't get the price that they want, and they just go sideways or they don't transact, and they wait a year or 2 years. And we're always there, ready to pick up whatever is available at the large end. So you can call it opportunistic. You can call it a focus. We are focused on it. When they do come up, and it's something that looks like an acquisition that we can be competitive in, we put a lot of effort into it. And sometimes it works, and sometimes it doesn't. But it's very hard to predict what's going to happen. But yes, there is a focus on it. It's like there's a focus on small and medium as well. But you have to have the right people interacting with the bankers to get this right. And I think we've got the right people in the right places to do it.

Maybe in that same vein, how does the coverage ratio look like? And how is Farley Noble's large acquisition group team having -- it seems like its coverage ratio improved, and has the team grown at all?

The team hasn't grown, but the coverage is really good. And don't forget, we're not looking to increase people within the -- within headquarters. So it's the folks in the operating groups that are selected to deal with the very large transactions. And so those folks work in conjunction with Farley to be in touch with the investment bankers and looking at the larger transactions. So our coverage is really good and, I have to say, way better than it was 5 years ago. And that's due to a large part with -- of Farley's effort in contacting the bankers for sure.

But keep in mind, Howard, 70% to 80% of these auctions never close. They literally spin everything up, have a data room, lots of action, visits to lawyers' offices with groups of managers and groups of investors, catered lunches, private flights, and nothing happens. So you've got to pick your spots.

Going back to that 20% to 30% of the deal is the cost, the comment that you put earlier, and it makes a lot of sense given those private flights. This other -- there's another question here about the spin-offs. So it seemed like based on last year's comments, the spin-off would only happen to fund a large acquisition. Has there been any change of thinking, this questioner asks, since then? This person asks about cultural reasons for spin-off. Any thoughts on that? Or has it been pretty similar to comments made last year?

Spin-offs are not an objective in and of themselves. We view them as a tool to help us make acquisitions that we couldn't otherwise make. And we don't just want to swap shares. We want to be able to invest capital as well. And so we will take a portfolio of our businesses in a particular vertical or geography along with some cash and combine it with another entity, whether it be vertical or geographic, to create something of a size that could create a spin-off. So by its very nature, the constraints that we place upon these ideas means that they will be infrequent, but they have the potential to create either geographical concentrations of capability or industry concentrations of capability that could evolve into quite different entities that are more strategically driven, that are more synergies-driven, that are more financially driven than Constellation is. And so I view it as both the tool to do large acquisitions and a way to deliberately evolve our model into something different.

And so I'm near the end of the section, and I've saved a fun one from the audience. So this person asks the largest single deal size that CSI would be willing to do plus the debt taken if the right investment opportunity came. So what is the largest single deal that you would tolerate? And maybe I'll ask Mark and then see if anybody else wants to chime in.

So we did exactly that analysis a couple of years ago. We talked about the concept of that sizing and the Kelly criterion and how it relates to what we do. And we talked exactly about how big we would go and pointed to 2 or 3 large public companies that we would be willing to ingest if they were at the right enterprises. So a, we've thought it through; b, I think we're very sensible about how we've thought it through; and c, we're not about to tell you.

Sneaked in the -- we can model it ourselves or try and guess in Excel. That's it for this section for me. Thanks for answering. And I'll turn it now over to Larry for questions on operations.

Thank you very much, Will. Operations, we defined fairly broadly and loosely to include topics of culture, organic growth, bonus schemes, then there are some specific questions for managers, Robin, Dexter, Jeff and David. But we first want to ask a question that came in this morning that we just didn't have an obvious location for. It's really about capital allocation philosophy. So it's not directed to anyone in particular, so people who think deeply about capital allocation, which is probably everyone on the screen, feel free, but Mark, Mark, Robin, both Marks. The question is, first, to imagine a software business with high-quality recurring revenue, strong retention, growing ARR but also carrying meaningful debt and enjoying good free cash flows. When you're advising the leadership team of such a business or running it yourself, how do you think about prioritizing uses of cash such as reinvesting in the business, paying down debt, returning capital through dividends or buybacks or funding expansion into adjacent verticals? So what framework, what capital allocation framework do you guys use in thinking about a situation like that?

Let me be directive on this one. We've got Damian on the line, and he's in a geography where most people are sleeping. Why don't we give him a crack at allocating capital? What are your priorities, Damian? And what would you do with it? Of course, sending it back to me is fine.

Thanks, Mark. I think it just depends what the options are available. So look at the potential options out there, weigh them up, model the outcomes and then deploy accordingly.

So you've been successful in deploying most of your capital, so it hasn't really been an issue, but let's say that your acquisitions, despite your efforts, end up plateauing and cash flows keep on growing. You are going to have excess capital. What are you going to do with it?

Well, I think if we don't have the debt, maybe I think it was in this example, but organic growth or expansion into new markets or adjacencies and initiatives, all options if there's no capital to deploy in acquisitions. So I think there's definitely -- I think we can do a lot more in organic -- on organic growth than what we've done. We definitely haven't reached the ceiling of what we can do there. I think we're probably better at deploying than we are at sort of growing organically. We're improving there, but there's definitely some more levers we could pull and invest in growing organically.

So Larry, I think the answer on adjacencies is one that all of our operating groups are exploring, and they're not staying totally focused on vertical market software. They are looking around the edges. Maybe we could hear from -- Mark, why don't you talk about one of the recent large investments you did, which had lots of hardware in it, and why you did it, and it was a big capital check to write?

Yes. We had to -- we acquired a fairly large business from Conduent that basically does both parking and red-light camera technology, which involves like basically acquiring a fair amount of hardware and sometimes in advance of getting paid for it as time goes by. It's a bit of a different type of acquisition for us. A lot of the similarities in the sense that as all of our companies, they've got some really great intellectual property around their business. It was a very difficult acquisition to pull out because together with Conduent, we had to work very hard in extracting the business from Conduent. It's a good example of a carve-out that is -- was very, very integrated. We had to create basically a whole team around it as we pulled it out and broke it into a couple of businesses. But we felt that for our Modaxo operating group, I guess or, I guess, we call it portfolio, who's heavily focused on people transportation and sells to cities and governments across the world that it was a very nice adjacency to step into. And we believe that it will be a good business for us, and we're sort of comfortable with the investment, but it does come with further -- more working capital challenges, and most of the acquisitions we've experienced before because of the -- just the way they structure their contracts. And so over time, we're slowly trying to work through that with the team, making them think -- look at their balance sheets, their balance sheet first before their income statement and learning a bit about the space. So that's a little bit of an overview.

Yes. Clearly, that sort of thing brings a different mindset to management. You're not just income statement managers anymore. You're balance sheet managers, and cash flows are more important than EBIT. And that has profound impacts on compensation and a host of other things. Obviously, the people who are managing return on invested capital are aware of this, but as soon as you drop down to a level where invested capital is no longer the driver on compensation, you've got people who are not aligned on worrying about balance sheets.

And it's interesting especially when you're doing a carve-out, and Conduent has been great to work with, and we've really enjoyed working with them through this. But when we're doing carve-outs, and we've done them for many, many years, a few decades actually. I remember one of the first ones we did in -- I think it was 2009, we acquired a transit business from Continental. And really, the people within -- it's such a small portion of the overall company that you're acquiring revenue, the people within that organization that you're bringing out haven't had to worry about balance sheets. They just don't have to because they're part of a large organization that doesn't really measure that at -- again, throughout the organization at the same level. And we're -- we've always done that, but this just highlights how important it is when you're acquiring a business that basically you're going to be paid for things that you've -- inventory you've acquired well into the future of that particular customer contract. So just yes, it's definitely adjacency. So very much I think balance sheet first, income statement second.

Mark, let me follow up on that, but -- and we'll get back to the capital allocation question. But just on the hardware, and that is an adjacency, you're well-known to be an educator and a sharer of best practices. You've got the universities. Do you have sufficient intellectual depth in that area across the organization or is that an area where you are...

We've had hardware in the organization since probably 2005, that sort of time, Larry. And it's -- as far as sharing best practices around it, I'd say there's probably some of that going on. But each business that has the hardware, it's integrated into usually a software suite as well. So I'd just say it's a more complicated business to run. And I think you need to be sure that the hardware is very proprietary to the industry. And the more proprietary it is, the better. And in some cases, it is much more proprietary especially particularly in our transit business as we have a lot of devices in vehicles across the world. And that equipment is very unique to the application and the particular problem it's solving. It isn't something you can kind of buy off the shelf, right? So I think that's one of the -- if you're talking about things that you want to be thinking about when you're acquiring it, I always do -- I do like looking at businesses that have proprietary hardware and especially if it's vertically -- it's integrated vertically with the software we're providing as well. So you have end users with inside the customer, and then they have equipment out in the field that's being used by people, and it's unique to that particular industry, that's sort of an interesting place to deploy some capital. But you have to think differently. You have to think about inventory and repairs. And there's a whole bunch of different metrics that we normally at Constellation aren't very good at, I would say, tracking as well because it's so different than a pure vertical market software business.

And can we get your thoughts on that capital allocation question? So you've got opportunities to reinvest in the business, pay down debt, send a dividend up, investments you've just described. Do you have a framework for thinking about that or is it much like Damian described?

Well, it depend -- yes, I think it's very similar. It depends on, first of all, I think very important as to who's running that business. You want to -- the old me would have done what -- as Damian suggests, whatever you're going to get the best returns doing, right? So I think Damian is correct, there's more you can do on organic growth, moving into additional areas of the customer. And you can do that in some cases with customer funding, which -- as well. So that's a really good place to deploy capital. But I would consider every opportunity I could. It's obviously a lot easier to deploy capital acquiring businesses or competitors. If you're one of those business leaders, then doing organic growth in a lot of cases, right? It's -- some of our businesses are generating pretty high EBIT. Deploying all of that in organic growth would be a challenge. Obviously, you'd like to make sure you can do a bit of both and write a check to maybe acquire a competitor or a product that would sell well into your customer base potentially if -- again, if I'm talking about a business, not a portfolio. So -- and the last thing you'd want to do would be shift the capital. But if you have -- if you've got the wrong leader in that business or a leader who you don't feel is going to patiently and rationally make good decisions around either organic growth or acquiring businesses, you'd much rather have that cash back and put it somewhere else.

Awesome. Thank you. This segue, Robin, I'll give you a chance to add or subtract from that but move into a question about operations loosely defined. And the questioner first wonders whether TSS has more of an M&A culture than Topicus does. And that speaks to the point Mark was just making. And then are these cultures aligned? And are they becoming more aligned or staying the same?

Yes. So to start with the second one, Larry. TSS has historically grown by acquiring companies. There was also my background as a founder of the company. And the Topicus operating group came way more out of developing software that was the background of the founders, and they grew that company organically with their own money. They didn't like to carry a lot of debt. But they also, over time, did smaller acquisitions and turn those acquisitions together with their development capabilities, knowing how to read the market. They were really able to develop those companies. So they're doing acquisitions as well, but they're doing a little bit more synergetic kind of acquisitions, which TSS historically hasn't done, where they use that developer capability, where they use their market positions in existing verticals, where they try to build value chains in those verticals. So they do things differently than TSS has done, but both have been successful, both use M&A, but Topicus operating group historically grew more through organic growth. And then your first question, for me, it's always simple, and I think the other guys referred to it as well, where can I make my best return given the risk profile? And if that's something in the business where we can strengthen the business, widen the moat, then I would love to invest in that business. And you started your question with debt. So all my experience in vertical market software is that the really high-quality companies can carry the debt. And if you structure that properly, you don't need to amortize and pay back, and then you can continue investing in the company. If that doesn't work, but the other guys already said it, you can move into adjacencies or acquire other companies. But definitely, we take a look at where can we make the best return on our dollar investment.

Thank you. Just on the cultural question, so it sounds like -- so 2 different cultures there, and you sort of respect those differences. Part of the culture is because of the founders. And so you've got similar companies, but they've got distinctive cultures, and you're going to let them continue in that. You're not trying to impose yourself on...

No, that's not what we are trying to do. That was also the idea from the outset that even TSS has been cut into 2 operating groups. So we have 3 operating groups. One is called TSS Public. The other is called TSS Blue. One does more Southern Europe, the other does more Northern Europe. And then in the spinout with Topicus, they became the third operating group. And from the beginning, the idea has been that it will be stand-alone operating group with their own DNA, with their own history, with their own culture. And there was not a problem to be fixed. It was trying to benefit from the strength. And even the 2 TSS companies are slightly different because the gentlemen running it have slightly different approaches. They have lots of stuff in common as well. And TSS -- sorry, Topicus operating group has always been a stand-alone operating group company. Of course, people go to each other's academies and learn from each other, and people, after a couple of years, know where to find and where to cooperate. But we really left it stand-alone to -- certain things Topicus operating group did differently than TSS did. And if that works, that's fine. If it doesn't work, then you have to think. And it accounts for both TSS as Topicus operating group. We try to learn, but things which are different and work, why wouldn't you cherish that?

A follow-up question from a different shareholder for you in that spirit. The question starts by observing that you're a long-term shareholder in Topicus and then wonders how you see the company long term, 10 to 20 years from now. And in particular, do you envision achieving the same growth rate, they say, 15% to 25% as currently?

Well, I study different serial acquirers, study the other operating groups within Constellation, and some of the operating groups within Constellation are larger than Topicus currently is. And if I take a look at the data and see how they developed over the last 5 years, I see that as something encouraging for us to continue doing what we do. And again, like I said earlier, it's not 1 year from the other but over time. So yes, we love to -- building. But as Mark said as well, really further out in time, we have to see how often we go to more adjacencies and edges. And I said already, we slowly move outside of Europe as well. But we love to continue building the firm out for the long term. We're not interested in the next quarter. We're building it for the next 10 years, let's say.

Excellent. Thank you very much. Turning to the next question, this is addressed to Mark Leonard. And a shareholder wonders if Constellation is relaxing the reinvestment requirement in its employee bonus program. We have heard, the shareholders says, from former employees and also the MIC noted that executive officers are now "generally" required to invest 75% of after-tax bonus into shares. Should we read anything into that word generally?

So we're not relaxing the requirement. We are creating another alternative. And currently, it's in the experimental stage where we're allowing employees to invest their bonus directly in underlying businesses. And it's very complex from a tax point of view to explain exactly how this all works, but basically, we're hoping that it helps people understand investments more and relate more directly to them rather than just investing in the parent company shares. So there'll be aligned employee co-investors still. It's just they may have a different portfolio than they do when they invest in Constellation shares. But the 75% criteria for senior execs is still in place. Once every 5 years, they're allowed to take all cash rather than shares. But that is the general, and I struggle to think of exceptions rule.

And so that is still in early pilot stages or experimental stages?

The alternative investment idea of co-investing, yes, very early stages and will not be significant for a number of years even if it is wildly successful.

Excellent. Next question, sticking on bonus schemes, the question is directed to Dexter, and it reads as follows. Is Perseus experimenting with a new bonus scheme? They've heard that it is. Is it intended to increase managers' focus on organic growth? And if so, can you share your assessment of the results so far and any learnings that you can share?

Well, thank you, Larry. I think it's too early to tell, and that's kind of a cop-out. We've only had 1 year where they have organic growth, and you really can't make any forecasts based on 1 year. What it's done, it's kind of gone and made it clear to a bunch of the managers that they can also make good bonuses with organic growth than acquisitions. And so there was -- to the earlier question, I can speak on a little bit more on, where would you invest? And my opinion is that it depends on the company. So if you have a legacy software that has a small share, would you invest in R&D on that or would you just go and run it and keep your customers and try to invest in R&D and sales to grow something that you can't grow? It's better to invest it in things of higher probability. Then you have some companies that have higher organic growth and there's opportunities to invest more. That is -- and we have a few companies like that. And always, it's great to invest in organic growth there because they're market leaders, they can grow, they can add on products, steal more customer share. And organic growth is, in most cases, way more valuable than acquired growth because you gain market share. One of the exceptions is that if you're able to buy a competitor and reduce the competitive nature of the industry is another good place to invest even if you're growing organically. And obviously, allocation of capital and buying new businesses is what Constellation does best. And so that's the best use of our funds. I think the worst use of our funds is -- like Robin said, is that if it can pay off the debt, why would you -- if it can support the debt, why would you pay it off? What you're doing is that you're trading in a 20% IRR or more for a -- 5% or whatever your loan costs. It's better to ship it off to Constellation and keep the loan because we get a higher rate of return from loaning it to Constellation.

Thank you for that additional illumination, Dexter. Yes, I think the sample company this questioner was asking is a sort of high-quality recurring revenue base, so -- but it is important -- the answer will depend on the particular leadership and the business.

The higher the quality of the company, the more you're willing to invest in organic growth. And also a good management team, you're willing to invest in acquired growth. And again, it's like Mark Miller said, it all depends on the management team on where you invest.

There's a nice question here about organic growth, I guess, sort of aggregate organic maintenance revenue growth. The shareholder is observing that they often hear us or Mark or others say, don't expect us to achieve 5% long term, expect more like 2% to 3%. And the questioner wonders why that would be so and what role inflation plays. And Mark, if you want to be directive and pick on somebody who you think would be most useful to answer that, please feel free.

Yes. So I mean I don't think I ever said expect 2% to 3% organic growth. I think that's a misquote. And I would hope that we at least keep pace with the GNP. And I think inflation would impact that, too, significantly. So yes, I'm annoyed. Feel free to have someone else try and talk to organic growth targets.

If anyone would like to, feel free. Otherwise, we can move on. Jeff, the next question is for you, and it invites your assessment of business performance at Allscripts. In particular, how would you evaluate the investment from an acquisition point of view? Do you continue to have an appetite for large acquisitions of that sort, including companies facing significant challenges?

So we've been very happy with the return on -- we call it Altera now. So I think we're very happy with the business. I think we have an appetite to do it again. I think if we -- we're -- I think like we're always knocking on doors and talking to people for assets that look like the Altera business. So I think we're always having conversations. Like to Bernie's point and to Mark's point, they just don't always come to fruition, right, all that often. So yes, I don't think there's anything that we've learned -- there's nothing we've learned through our Altera experience that would cause us not to do it. I think we've had a lot of learnings through our Altera experience that we would put to use on the next one to try and make it better and less painful and do things faster than we did. And I think those types of learnings, I think there's plenty of those that we would do. But no, I think we have a definite appetite for it. The Altera one was a significant equity check and significant third-party leverage to Dexter and -- I'm not sure we all said it, like maintaining the debt has not been a problem, right? These businesses have strong cash flows. To Mark's point, even though Altera is, I would still say, a vertical market software business that does not have hardware or not significant hardware, it does have a more complicated balance sheet. So I do think there's been some learnings there on making sure that our leaders are not just focused on, right, the P&L but also incorporating thinking about the balance sheet and tying up cash on the balance sheet. So again, some good learnings there, again, that we would just take forward and apply.

Excellent. Thank you very much. That concludes this segment of the Q&A. The next topic and the fourth round is technological innovation, including AI, and I'll turn the floor back to Will Pan.

Thanks, Larry. We've got so many -- expectedly, we got so many questions about AI this year that we promoted it to its own section. So this will focus on technological innovation, particularly impact of AI on operations and competitiveness. We're going to be asking questions about how Constellation is adapting to and leveraging new technologies to stay competitive and drive growth and how these are shaping our strategy. We've got a lot of sort of somewhat repetitive questions, but we have enough to cover pretty much all the operating group heads. And so that's -- the questions are going to be similar with different flavors for each of you, but each of you will have sort of your time to opine on how AI may or may not be impacting your business so far and how you're thinking about it. So to start with Mark Miller, starts a little bit philosophical, what do you think are the barriers to competition when it comes to success in vertical market software? It suggests, between development of software and distribution of software, what usually carries the bigger weight for a vertical market software company's success? And I mean limit yourself to development and distribution.

Yes. I think development is usually the biggest, right? If you look at Porter's Five Forces, right, like it would be that the barrier to entry would be generally around how many years it takes to develop software. And you also have a customer base there, too, which, in some of our businesses, very low attrition. So that -- those 2 things combined provide you sometimes more comfort than you deserve, I would say, because it takes a long time to get there. And I think you do want me to talk a little bit about AI related...

Right. Do you see these barriers breaking down with AI? And which of them are...

So I try to put it in perspective. This question gets asked a lot at our internal events. And I'm a developer by background, and I've been through so many different cycles of mainframes to mini computers to PCs that weren't networked and network PCs. And then we had -- Y2K came along, and that caused a major -- with the Internet in '95 coming out, caused another thing that obviously was going to change the world. And for B2B, in some of our businesses, it hasn't changed that much. I used to write transit software, and there's still -- some of the things that was done on the mainframes are still what's happening today on the PCs, right? And then mobile computing came along. And after that, they're saying, well, mobile compute is going to change our businesses substantially. Market, everybody is going to be using their mobile computers to do things. And interestingly enough, many of our businesses had also some organic growth areas, plans because of mobile computing and how it was going to change. And it hasn't had the impact that you would think. So technology change has been an ongoing thing. One of the common threads you always hear with new platforms, development platforms in particular, is we're going to be able to build this product quicker and because we're using more advanced tools to do it. And I have yet to see that happen. AI might provide some of that. We have some of our leaders working on looking at replatforming or rewriting products using AI. So give you some -- well, I'll have some better information on that as time passes. And we're encouraging most of our businesses, because we do have a very good network of learning between them, to sort of share best practices around how they're using it to improve their products sort of from a low-hanging fruit perspective, right, just adding some efficiency gains and how they interact with their customers from a customer support perspective or what have you. So I have to say we're worried about it, we're paranoid about it, but it's just I haven't seen it having a dramatic effect. It's kind of, again, it's -- go back to the Internet is going to change everything. Mobile computing is going to change everything. AI will, and our good leaders will adapt to those changes inside at Constellation. They will accelerate things they do from a development perspective, how they interact with their customers, if they've got good moats around their businesses, which means it's taking maybe years of development, but they're also connected into a lot of other systems that our customers have. It isn't just the stand-alone application that's just used by itself. So I think there's also that to take into account well -- as well. And so if it does accelerate development, great. I think we should be doing that, and I think our leaders will do that. If it does create -- if you do have rash competitors in markets that you're starting to lose share because someone is being able to enter that market and being able to take away some of your customers, you're just going to have to respond to that either by reducing your costs as well or let's deploy that capital elsewhere inside of Constellation. So that's just a quick overview of my thinking on it right now.

Right. Barry, the next flavor of this question comes to you. How do you assess the risk that AI reduces switching costs through things like automated implementation or barriers to entry through lower cost of development and software? Could this risk lead to an impairment across Constellation's businesses?

Yes. I mean obviously, I think Mark hit a lot on those things. Obviously, it's going to probably accelerate the time to develop a product. And the question, is it going to accelerate it from -- current product might take 5 to 10 years to develop from the beginning to the end, and can accelerate it to 2 years, 3 years? Maybe, I don't know. We'll see as we go along, but it definitely will shrink the barriers to entry. And the trick for us is to make sure that as those barriers to entry shrink a little bit, we're building other barriers to entry and making sure that we're adding tremendous value to our products, add-on products, additional things, additional services we can do for our customers, all that type of stuff because if someone does build a product that's exactly what we have today, which is fine, but I would hope that we're doing something to make what we have today better tomorrow and the next day and the next day. And we're also using these tools to be efficient in how we do it. So we get there quicker and quicker. And so I always think there will be a barrier to entry. It might shrink a little bit, but the barrier to entry will always be there. As long as we do our jobs -- and the key is going to be the people we have running these businesses doing their jobs and making sure they stay ahead of the competition. The other trick for us will be, I'd love to say we're perfect and we never make a mistake, but we do make mistakes, and there'll be some businesses that miss the boat, and a competitor will creep up on them and catch up to them and maybe even surpass them. And then it's our job to decide if it's a great allocation of capital to keep chasing that market or maybe the better option is to not chase the market as hard and work on strong retention and use that capital in another business that didn't miss the boat and accelerate it. So we're thinking about all those things, and I'm paranoid about it as well. But I do believe if we act rationally and have great people working for us, we'll figure it out most of the time, but we definitely will make mistakes, there's no question about it.

Jeff Bender, this question says, Constellation's business has been built on relatively small acquisitions. Looking at new AI tools like Cursor, it appears as though the barrier to creating relatively specialized small pieces of software is coming down fairly materially. While we appreciate that a meaningful part of the value of good software is in understanding a problem set and ensuring system stability, et cetera, we're curious to the extent to which these emerging AI code tools are playing into your understanding of the types of assets you're looking at, the expected resilience of existing portfolio businesses and even your willingness to invest in product extensions and feature development within your existing portfolio.

So I think obviously, every business that we look at currently, we are always looking at the competitive landscape to understand what we believe -- because again, we own these businesses forever. So that's always been part of how we look at deploying our capital. So I think there isn't a change in how we do that other than we now incorporate, right, how might AI impact that. So obviously, we're looking at that. But I think as Mark and Barry have said, we're all still learning what that means, how that works, what it will look like. So I think really our approach, at least in the Harris organization, I think it's pretty similar with all of the sister cos, is really just doing as much as we can, experimenting as much as we can, sharing as much as we can across all of our different businesses. And I think that really is probably one of the things that makes Constellation most successful, is this ability and willingness to share and to experiment and to measure. And I think AI is no different than any other thing that we've done relative to a best practice. When you go to our best practices sessions, we held one a month ago. There's all kinds of AI sessions now. I was just at one. Again, I was at a Perseus one. Again, there are AI sessions now. So I think if you're a shareholder and you're concerned that we're not thinking about it, and you heard Mark say paranoid, you heard Barry say paranoid, we are absolutely thinking about it and really driving it down into all of our businesses to understand where it will have the best or the most impact in terms of what it is that we're trying to do.

Great. Dexter, on the topic of Perseus, the question is, how do you think about AI risk coming from self-provisioning, in other words, customers doing it themselves, versus the risk of someone else or new entrants creating software with AI?

Well, what I understand about AI is that it requires data and how much data does a customer have to train it. I'm not expert enough to talk about that. My idea about AI and reducing the moat is that you can program it faster, I possibly program it faster. I would agree with that. One of the other things that AI can't do is they can't sell the software. They can't put people in there to train people. That all takes experts and people who know the industry. And there's a lot of -- AI is very good for expert tasks of, for instance, comparing images, say, for instance. And so in the medical field where you have expert -- we have very defined limits, AI is very good at that. When you have a broad question, you need a person that has the experience outside of what the AI has been controlled with. I'll get back to my comment on selling the software. And so some of these software packages, they're throughout the whole organization. They've used it for years. It's a very small vertical. And so if I was an AI -- developing a new AI product, where would I go after? Would I go -- and I use pulp and paper a lot. Would I go after the pulp and paper sector where people can't change out that software very quickly? It's very big. It's very complicated. It's taken decades to develop it. An AI guy wouldn't go after that type of market. They would go where there's more potential customers. And so I can see that happening possibly in real estate where you have 1 million real estate agents in the U.S. and developing something to sell to 1 million people, but to sell to 40 pulp and paper plants or 50 pulp and paper plants or pulp and paper companies in the U.S., that doesn't make sense. So you'll find some areas where you should go into AI. And again, like everyone else, Perseus is doing some experimenting, and we're all conscious of it. And it's just a matter of gaining experience on it and sharing ideas and sharing kind of results, both good and bad, in what happened with AI. And with Constellation, it's not like we're one -- we're so decentralized, there's just so many other minds thinking of it rather than a single solitary centrally controlled company where the CEO says, "Let's go to AI. Let's hire 1,000 people in a developing country, have 1,000 people punching in the data to train these things." And they end up not selling any or spending too much on it. And I've seen that happen in some acquisitions we've done, too. We've picked up companies that have spent millions and millions of dollars with AI with no return. So a lot of things you have to do, experiment, and it's not like -- we're not like a venture capital that we're going and spending a lot of money at something that may either be a home run or a strikeout. So we share -- and again, I get to the network of people that we have, the number of ideas that are coming out. And if we share those best practices, that's the best way to kind of grow AI, and somebody will stumble upon -- since we have hundreds of companies, somebody will stumble upon one good use for it, and that will kind of be communicated out to other companies at Constellation.

Will, maybe I could interject and try and throw a couple of conceptual frameworks around the questions. We have hundreds of people using AI internally, hundreds of our business units using it internally in development and increasingly in support. In development because you've got a constrained rule set, and therefore, AI performs reasonably well, generating 90% solutions. In support because we have knowledge bases that are already created for the support groups, and therefore, training an AI on them is pretty simple, and the existing -- and the tools already exist. So that stuff is happening everywhere, pretty much everywhere. Where it is more of a threat or more of an opportunity depends to some extent on the kind of business you're talking about. So if you're talking about a SaaS business with very few people with software that is sold through the Internet that has very little training, very little support, that isn't automated, then I would think AI would be a pretty significant threat. The other end of the spectrum, and Dexter gave the example of pulp and paper is where we deploy a solution that looks like an awful lot of people who spent an awful lot of time around pulp and paper and software. So we're providing advice, support, customization, integration and intimate knowledge of the pulp and paper industry. And so at that end of the spectrum where it's a bundle of services and software, I think AI is much less of a threat and much more of an opportunity where we can deliver what we're learning about AI to our end customers. So I believe in many instances, we are the trusted IT partner of our customers and are the most logical source of AI knowledge and learning. And although it isn't ready for prime time and you can only get 90% solutions, I think a lot of clients are willing to work with 90% solutions just to get experience. And I think we're the most obvious source of those 90% AI solutions for clients. I'll let you get back to questioning other victims.

Do you have any views on whether there is some quotient of your portfolio, of the Constellation portfolio overall that is that lighterweight SaaS solution that's sold without high touch? Do you have any perspective...

What portion of our portfolio?

Yes. We used to think of -- when I think about AI and development, I do think back to earlier AGMs years ago when SaaS was coming on and people would ask, hey, what percentage of your portfolio is SaaS? Now I think SaaS is many things, not just technology, includes just -- not just the business model, and there are stronger and weaker SaaS companies. But you were talking in particular about the more vulnerable type of SaaS companies, and I'm sort of wondering whether you think about the part -- portion of your business that may be more exposed like that.

Yes. I mean the high churn, low switching cost, price-driven, market share-driven model, let's call it a monopolization model, if I'm trying to win a particular point solution market with a SaaS solution, I'm going to offer it for free, I'm going to try and get people using it, I'm going to try and have brand. I'm going to drive into the marketplace. I'm going to lose money for years on the promise of one day making 30% or 40% or 50% EBIT. And how many of those companies exist? There is a tiny, tiny handful that we've actually experienced. And that's because I think a lot of the promise of true economies of scale and price-based competition hasn't evolved. People aren't really looking for the cheapest IT system they can lay their hands on. They're looking for an IT system that gives them the ability to run the business efficiently, as efficiently as their competitors and very occasionally, in the case of large clients, who view IT as a strategic advantage, they're looking at it as a strategic tool. And what they really want is customization. Now customization is the antithesis of the SaaS low-priced, win-at-any-cost sort of approach. And so I think there's an awful lot of space in most markets for a strategy that isn't economies of scale-driven and low price and that the high-service model is one that will be least attacked and least frequently attacked by AI. It can be improved, customer support can get better, the cost of development can get better. If you really can produce twice as much software with the same number of people -- what's the number of backlogged apps that the average large client has? It's literally years of things they would like us to do for them that we can't really afford to do at the prices they really want to pay. Well, if the cost just came down by half, boy, we can deliver huge amounts of value to those people. So it's exciting, but it's obviously also very scary, and no one's got a crystal ball. And so as the guys say, we will monitor, we will stay abreast, we will experiment, and we will get better and better over time. And hopefully, we'll be that trusted IT partner who delivers AI for most of our clients.

Great. Robin, you did have a question specific to you and Topicus about this that I'll just run by you. How is Topicus competing with or addressing new deployments of AI models aimed at specific verticals, if you've seen any?

Yes. I think most has been just said. And we run those experiments as well in different businesses in different units. And we have one of our expert directors who is really involved in this field who loves this, who's studied this the whole day. He is involved as well and monitoring and seeing what works and what doesn't work. And that's what we're doing. So like the other operating groups, we think about it, we have our own mental models. I think Mark just said a lot about it. So we have the distribution power, like Mark said. We're the trusted partner for our clients. There is data. So there are lots of angles that we have a position to be played out. That's what lots of people believe. But like the other guys already mentioned, we have to be on our toes, and we have to do a good job.

Great. David Nyland or Damian, do you have thoughts that you want to share? Okay. Well, one last one for Bernie is if it is, when did AI become part of your diligence process? Do you have any examples of investments you've passed on due to AI uncertainty and examples of investments you've made where you've gotten comfortable with AI risks?

We're not looking at AI as a solution within the businesses that we're buying. We're looking at the businesses as they stand on their own. And whatever risks surround them, be it competition, be it AI, that's the way we look at it. I guess the way that we would flip it around is that we are looking at AI as a tool to help us make acquisitions, and we're looking at various aspects of the whole process of acquisitions to see how it could help us. But that's about it. But we're not looking at businesses specifically with that AI lens, so -- if that helps.

Okay. Great. Thanks very much, everybody. That's it for the AI and technology questions. I'll hand it over to Howard for governance questions.

Okay. Thanks, Will. So on to the governance section. So it's -- these are questions about Board composition, ethical standards as well as conflict of interests and sometimes thorny ones about how Constellation ensures transparency, accountability and high ethical standards across a global operation. So maybe the first one to Jamal. So this questioner here asks, as you become larger around the globe with over 1,000 operating businesses, how do you ensure that operating units carry a high standard of ethics especially in jurisdictions where the rule of law may be different than in the developed world? Are accounting practices and protocols standardized across the board? And the questioner elaborates here they're thinking about companies like SNC, which have gotten in trouble into corruption scandals. Is that a risk that keeps you up at night?

Yes. So we definitely have an internal audit group across Constellation, and we do have a standardized set of accounting policies that we ensure everybody is meeting. We have internal audit head office. We have internal audit at all of the operating groups. We also have -- our VP of Finance has an Accounting Compliance Committee that he has these -- he calls them accounting ninjas in each of the groups where they understand all of the intricacies of what we're trying to account for and ensure it's pushed down. But high level, though, the accounting for Constellation and the companies we own, it's pretty straightforward. I mean it's software, it's maintenance recurring revenue, the amortized. There's professional services. There are key things you can look at such as WIP, aging of WIP, aging of AR. And so all of the groups are focused on this, head office is focused on it, internal audit is focused on it. So it's not a concern that keeps me up at night.

And is there -- when you talk about some of these professional services, is there any kind of review either in the internal audit group or kind of beyond in other groups of contracts awarded to the government agencies in developing countries or where there's more higher-risk geopolitical jurisdictions?

Without a doubt. Look, that's not even just head -- I mean accounting and legal would be involved there. It's a list of those nations that are troubled, and they would be reviewed. I mean there was -- we just -- all contracts over a certain threshold are reviewed not just by the legal at head offices but -- or sorry, the operating groups but also by head office. So yes, there's a lot of rules and ways that we monitor this.

Thanks, Jamal. The next set of questions are for David. And first one, the questioner asks and says, I hope you're doing well and your health continues to recover. Would you be open to briefly sharing an update on your health following your leave earlier this year to the extent that you feel comfortable?

Yes. I mean when I embarked on this journey 12.5 years ago, I didn't know it was going to be a 25-year journey. And that's the way I feel about the journey right now. So we're just getting started. We're halfway through that 25 years. I'm super excited about the future and super motivated surrounded by a team that's super motivated. So really, that's all I can say, is that there's a huge amount of confidence in Lumine, and I'm super motivated to drive it forward.

Thanks, David. It's -- and to elaborate on that, the questioner wants to know, what are the advantages so far of being "independent" now, within the Constellation framework but relatively independent? And do you find any advantages in being spun off?

Yes. So obviously, we now have a currency which is directly related to our own performance. And there's a sense of pride and ownership that comes with owning shares in Lumine because you can directly influence the future of Lumine. So that's been very positive over the last couple of years, and I expect that to continue over time as it relates to management and key employee long-term incentives. So that's very different obviously than being inside Constellation. Beyond that, we follow the same hurdle rates. We have the same governance and control framework, and we operate very much like an operating group. So it's tried and tested, and it works well, and we fall in line and we support it in any case. Now if we were to test boundaries, I think there would be some appetite to consider our ideas as we venture out and see new things and experiment. So that, I feel confident about in the future and within the constraints we operate within, which like I said, a net positive for us in terms of being a safe haven for deploying capital.

Yes, it's kind of best of both worlds almost. The next question is for Mark Leonard on buybacks. So you've previously written to shareholders indicating that you do not think CSI stock purchases for Constellation are appropriate due to moral hazard or inside information. However, at last year's AGM, you indicated that you would be open to stock buybacks in the future. Any updated thoughts on this topic? I know you mentioned it briefly in the beginning, but any further thoughts on buybacks?

I enjoy the implication that I've gotten rid of my moral hazard concerns, and my ethics now allow me to buy back shares. So my concern about buybacks is the ambush concern. So if I, at the end of a quarter, report that we bought back a bunch of shares at a particular price, then those people have been selling to us, not having known that we're buying back shares. So that feels wrong. If we, at the front end of a quarter, say, during the course of the next year, we will buy back this many shares at this price, I feel much more comfortable about buybacks. So that's the moral hazard issue. It's still a concern that we know vastly more about the business than the people selling shares to us. And so I'm always going to be uncomfortable with it. But if I have yelled from the rooftops that this thing is way too cheap and you should be buying shares and you should not be selling shares, then buying back shares is less of a concern. The problem with that, of course, is you don't get to buy back any shares if you make enough noise and people believe you that it is too cheap. And so it just becomes a way of manipulating price as opposed to actually deploying capital. And so buying back shares as a method of deploying capital where you are being ethical about it, I think, is a bit self-defeating.

Constellation's current valuation and -- or at least your thoughts on valuation, we're not -- I don't hear you shouting from the rooftops.

So I am not a big fan of generating market rates of return. If you want to generate a 6% to 8% rate of return by buying an ETF, go for it, and we're part of those ETFs. And so obviously, our stock is priced to generate a 6% to 8% rate of return for the foreseeable future by the market. That's their discount rate. So if you want to make 20% or 25% rates of return, then I'd love that, but you probably have to buy Constellation at 1/4 of the current price to do that.

Those are good thoughts. Next set of questions are around the changes to the Board. So maybe I'll ask those to John. So this questioner asks, 7 directors are not standing for reelection to the CSI Board. That seems like a high turnover for 1 year. Can you provide any insights on this big change and how that links to the new Advisory Board?

John, do you want to take a crack at that or do you want me?

Sorry, just trying to find my mute button there. I can take a crack at it. When you say 40%, 7 Board members, it sounds a lot more than it is. And Howard, the bulk of those people are moving to the Advisory Board, and that's a new structure we've set up. It's -- we put it in there because there have been a number of people over the years that we wanted their input on the Board, but we're constrained by the various constraints out there, the TSX and the proxy firms. This gives us more flexibility to get that input. And you will know that Damian came on the Advisory Board as an example of that. And there was a -- one of the Board members moved over to Topicus to fill a void that Robin had. So the purpose of the Advisory Board is to bring in more varied points of view, and they will be attending all of the Board meetings moving forward, so that their knowledge will be on par with the directors, and the directors will be seeking their input on an as-needed basis.

So the Advisory Board essentially is going to be concurrent, having meetings with the Board, and they'll just get to listen in and offer their input, it sounds like the main points.

Correct.

And just as a follow-up to that, this questioner asks about whether the panel here has any views on the Board becoming a less important body given that there's been 6 meetings in 2024 versus 13 in the year before. Any thoughts about how to maximize efficiency of the Board without maybe taking up too much time?

Yes. When you put the numbers to me, I'm surprised at those numbers, but my guess is if I -- if you go through our annual calendar, we obviously meet on a quarterly basis, and we have some other mandatory meetings. When you're seeing meetings outside of that, it's likely because we couldn't fold in the approval of large acquisitions, which is the reason we would call meetings. So sometimes we're able to put those on the regular agenda of our Board meeting, and sometimes we're not. So my guess is in the prior year, there were either more large acquisitions that required approval or we just couldn't put them into our regular meetings. So I'm assuming Lumine happened in 2024, but -- and that would have been the cause of some of those meetings. But it didn't feel like a year that was any lighter than the year before or any less involvement by the Board.

I think nothing philosophical changing, it's just based on timing.

No. Timing. I mean there is -- over time, we would change the threshold of what needs to be approved by the Board as the company grows, but I don't think that had any impact last year.

Maybe another question about the Board and more generally the philosophy of how it operates. This questioner asks, the Board, including now the Advisory Board, has had many insider executives, which have been very successful. This brings great depth. But how do you or how does the Board invite an alternative view? And who surfaces hidden risks?

I'll start there, but I think probably the managers are the first ones to dive into the biggest risks. So I think Mark has mentioned a number of times that profiles of copycats are discussed at the Board and profiles of disruptors as well, so those SaaS companies that are earning a whole bunch of cash to try to enter into one of our verticals. So I think historically, that's been done by the management team. On the Board itself, as you know, there's -- we have some governance experts. We have some legal and tax experts. We have a couple of investor experts. So there's a whole host of skills on the Board. But yes, I think that's where we get the opposing views.

It's actually the internal -- the executives who are there to share best practices and lessons and find hidden risks. Maybe one about conflicts of interest. So this is kind of like a theoretical situation that the shareholder brings up. So this shareholder envisions a threat of competition from within your own employees. So maybe -- this person asks that they must be tempted to borrow money and buy a particularly attractive target themselves especially in a decentralized organization. And so this shareholder wonders, what kind of private investments are employees prohibited from making? And how does the Board oversee the senior execs' private business interests?

Yes. So I think at the Board level and the executive level, and this will vary by geography, but there are employment contracts in place that would have restrictions around investments. But outside of that, the analogy that you spoke to has happened before. So it's incumbent on CSI and the managers to make sure that we're a desirable place to work and that they understand the benefits of staying within Constellation as opposed to doing it themselves. And then anything outside of the norm, like Board positions in other software companies, those would require approval, and they're obviously disclosed in our circular.

And so you can make the rules, but at the end of the day, it's about making sure that the employees want to stay and want to advance the overall company. Maybe one last one for me about succession. So this questioner, given Buffett's big announcement about his retirement, can you provide any updates about the succession planning for Mark Leonard? From previous meetings, it seems like it's been well planned and thought through, but was curious to know if there are any big steps or decisions left to take in the process.

When I heard Warren Buffett announce his -- sorry, Mark -- announce his retirement, I thought for sure that Mark would do the same thing at the AGM at some point in time. So this will be the forum we hear about it. But I don't think it's changed. Every 2 years, we rotate through all of the subsidiaries, their succession plans, and I think we're very fortunate that everyone on this phone here has been with the company for 20, 30 years. So there's a very deep bench with a lot of experience. And then we have a discussion about Mark's succession as well on a regular basis. And that changes and evolves over time as people change and the organization changes as well. It hasn't been a consistent answer for the last 20 years.

Mark, do you want to say anything about your -- or show us any signs?

I was thinking of trying to recruit Greg Abel, but since the announcement, I mean less likely to pull that off.

Yes. It's -- I don't know if he signed anything yet, so maybe reach out again. But that's it for me. Thanks so much for answering these -- attacking these tricky questions, and I'll turn it over to Larry.

This is the final segment of questions unassigned to other categories. So it's a mix of topics, some for particular managers, most open to all, several addressed to Mark Leonard. So this is to David and Robin about their -- the units they lead. Would you consider your company, Lumine, Topicus, relisting from the venture exchange to the Toronto Stock Exchange? And what are the pros and cons of each both from a corporate and from a shareholder perspective? And Robin, why don't you go first?

Yes, sorry about that. So we currently don't have any plans for that. We are trying to be focused on building intrinsic value. So we love to see our shareholders as partners that can be on different exchanges. You might have more investors like indexers on the TSX. But there are some different pluses or minuses. The regulations are a little bit lighter on the TSXV. But currently, weighting out those pluses and minuses, we're happy where we are currently.

Yes, just to echo what Robin said, and obviously, we're very, very new, a new public company, so very happy where we are right now.

Okay. Sounds simple enough. Same 2 gentlemen, have you -- David and Robin, have you ever considered writing an annual letter to shareholders? This shareholder notes that at the annual meeting, this conversation is a good way to convey information and respond to shareholder questions, but might a shareholder letter be an additional valuable way for you guys to do so especially given the age of your public listings? Let's go in the opposite order this time, David first and then Robin.

Yes. So Robin, you have to follow me, right? So yes, so I don't see any reason why we wouldn't do that. Like you say, we're still relatively early in our journey, and there are some unique things about Lumine that still requires some explanation. So for sure, that's something we would consider.

I haven't considered it yet, Larry, but we could have a discussion internally about it and see if it really brings something in addition, but haven't considered it yet.

Okay. Thank you very much. I know that it takes a lot of effort, that's all I'll say. People who do that and do it well spend an enormous amount of time. So shareholders should consider that as they think about that question. Here's a question for anyone who wishes to opine, and Mark Leonard, feel free to be directive, if you want. The question is, there appears to be an emerging or existent wealth disparity between long-time Constellation employees and newer ones. And it's just the reality. But what challenges or benefits does that circumstance present? How do you think about it?

So it's -- I mean, greed is not a problem. I don't mind people aspiring to wealth. Jealousy over other people's wealth just seems inappropriate. Obviously, the Constellation shares have outperformed most traded stocks in most markets, in most parts of the world. And the people who were lucky and good enough to buy them in the early days have benefited enormously. And so I don't think that's the issue. The issue for me is the opportunity that people have, investing their bonuses, to generate good rates of return going forward. And we mentioned the co-investment scheme that we're working on. It's designed to address that issue. It's designed to give people an alternative to investing in Constellation shares and allow them to invest directly, or somewhat slightly indirectly, but in the underlying companies that we're buying. And I think it will provide people who are long-term oriented an opportunity to create wealth that will far exceed what they will be able to generate in the public markets 99.9% of the time. And so that's the solution that we've come up with. I'm proud that both the Board and the operating group general managers have allowed us to do this. It's complex. It's difficult. It's not an easy sell. But if we make it work, I think it will be revolutionary and will provide our newer employees with an opportunity that they won't find anywhere else.

Would anyone else care to comment, before we could move on? Here's one again for everybody. It seems like an inevitable question in our current moment. The question is, how exposed is Constellation Software or its individual operating groups or businesses to U.S. tariffs and global trade wars? And what protections do you take against that risk? And I think that's a meaningful question. The other part of the question is, do you face any risk from DOGE, the Department of Government Efficiency? This is probably a business-by-business topic. But if anyone would like to take a leap.

I can kick in if you want.

Thanks, Mark.

Yes, sure. I mean it really -- we're obviously keeping a close eye on it, and there are some contracts you've had to do some things that are DOGE-related that we've had to write some things for customers and what-have-you. But overall, there hasn't been any impact to date. The only concern would be any of our businesses where we're importing hardware and what impact tariffs might have on those. But that yet has -- it's still, again, too early to say what, if any, material impact it will have on us at this point. So sort of sit and wait and see and keep an eye on the situation [indiscernible].

Anyone else?

I have a general comment, Larry, if you want it. Obviously, tariffs will impact the economy in general, if they are, A, volatile, or, B, high. And to the extent that happens, we will be hurt. If our clients are suffering, they will spend less on IT, and it will be a setback. So tariffs are going to affect us. And I wouldn't be surprised if, in the second half of the year, we don't see ourselves doing less well than we currently expect if the tariff noise continues on for any length of time. So I'm concerned about them. I think all of our people are. And then there are some, a few, of our business units that are more directly affected. But very few so far.

Here's another question. It's come up a little bit, the stock price basically. It's come up a couple of times today. But this is sort of a philosophical question, I guess. This shareholder observes that people analyze or conduct valuation analyses in different ways and then relate the stock price to it with different multiples. The multiple, if you're just looking at free cash flow, for example, is high 20s. But looking at FCFA2S, it's a lot higher. Does that differing set of analytical appetites or tools matter to you? Does it create any opportunities or problems for Constellation? I guess let's start that with Mark Leonard.

So I can't remember the last time we sold the share to raise money. But it's a long time ago, decades. So the stock price doesn't directly affect us. To the extent that it doesn't reflect intrinsic value and we're requiring our employees to buy shares, then they're either getting them cheaper or more expensive than they should. And so we'd like the stock price to be priced around intrinsic value, not too high and not too low. So it's sort of Goldilocks, is what we're looking for in terms of our stock price.

Do you have any impression over sort of the long-run relationship? Are they -- is it typically Goldilocks? I mean over long periods of time, I know there's lots of fluctuation between.

Well, apparently, we don't fluctuate as much as most stocks. I think our beta is less than 1, but could be wrong. And yes, I don't really have a view on whether it should go up or down.

Another one for you, Mark. This person refers to comments she remembers from last year to the effect that the Board reviews 1 or 2 Constellation copycats per quarter. And she wants to know if you'd care to share any learnings from the collation of that material, and whether there are any lessons that Constellation applies from studying those copycats.

So we study them. We look for any lessons that there might be, and obviously, periodically encourage our friends to hire any quality employees they have. But other than that, not that much, Larry. It isn't obvious yet if any of them are working well. They're not public or they haven't had exits where the information has been broadly available. And as you know, if an investment banker puts out a document, it's very hard to pass through to the underlying data frequently on how the businesses are actually doing. So even when they're fundraising, when we get hold of a fundraising document, it's hard to read.

Thanks. Flip it around with a similar theme, a different shareholder recalls from last year's General Meeting, you mentioned that you were studying or planning to study Motorola. And she wants to know if you've learned any particular useful lessons from them, and if you've studied other high-performing conglomerates this past year.

So we've studied Motorola Solutions and we also studied Hexagon. The reason we did it was to understand a hybrid hardware-software businesses. Motorola was a wonderful example of a business that moved from being a device business to a recurring revenue business that had software as a very significant portion of their offering, along with a series of very specific services to maintain and establish networks. So a terrific business. Fascinating to see the impact of a series of large investors on the company and its strategy over time. So rare to see. Usually that's an internally developed and driven sort of thing. Whereas in this instance, I got the feeling that large outside investors had a big hand in shaping strategy. In the case of Hexagon, came from the hardware side of the business. Acquired significant amounts of software, much of it related to the hardware that they owned. And then started investing in software that didn't relate to their hardware and where there were no synergies. And I think they've decided, they've announced, that they're going to spin off the unrelated software. So that struck me as a very good strategic decision. And I think we enjoyed and learned from both of those exercises, at least I did, in creating them. And hopefully, the Board did and the managers did from reading them and discussing them.

Thank you. Follow-up on that theme, I think. What -- this is verbatim from a shareholder, to Mark Leonard. What management issue that you're currently working on do you have the least confidence in achieving?

Finding high-return places to invest billions of dollars of capital.

Interesting. Is that a management issue or an investment issue?

Well, if you have the right managers, perhaps you can find them.

What is the most -- what, flipping around, what's occupying your -- what management issue is occupying your time, energy and attention the most of these days?

So the search around adjacencies of one form or another has been a big chunk of time. Monitoring what's going on in AI is a big chunk of time. The experiment of Perseus of putting the organic growth as a much bigger component of the wellness system and having the profitability be a much smaller component of the profitability -- of the compensation system, is one I'm fascinated by in trying to get rolled out. It takes time. And it also takes time for people to change behavior as it relates to compensation. And so those are things I'm thinking about.

VMS Ventures, someone would like to know how that's -- how that experiment is going.

So the good news is that, if I had been this successful doing venture investments back when I was a venture capitalist, I wouldn't have started Constellation and you wouldn't have to be sitting through this meeting. So it's going well. It has had very small take-up. We've only made a half dozen -- sorry, investments. But the success rate is way too high for true venture, probably due to a couple of things. We're working with a group of managers often whom we know or vertical markets that we know. And so our depth of knowledge surrounding the investments is greater than the average VC would have. And we're probably aiming lower, so the bar is lower. So we're not aiming to create $1 billion companies. We're aiming to create $10 million companies. And so perhaps that's why we're having more success. But I'm really happy with it, except I just wish we had 50 of them instead of 5 of them sort of cranking away.

Excellent. And before I turn to some questions for the panel, one final one that's just for you. It relates to compensation, I guess, and I'm just going to read it verbatim too, addressed to Mark Leonard. When you look back on your gesture of "working for free" for the past decade, what has been the impact on the business beyond the amount saved on one individual's compensation?

So I think it just makes the Board really reticent about firing me. In terms of value for money, I am a spectacular deal.

Yes, that's what we're -- every meeting, that's what we're saying.

I figured. Speaking of which, Larry, I just wanted to point out that Potpourri as the name of your section is a branding mistake. You really have to work on that. So maybe for the next AGM, we'll come up with a new section head for the part where you pose the questions.

We asked -- we had 6 different words: miscellaneous, unassigned, potpourri. I think we thought it was nice because -- I forget the actual etymology. But it's from French and so we thought that would be fun for our friends in Montreal. But let's turn -- the joke about Greg Abel was very funny. He's obviously paid a lot more than you. But a couple of these final questions are all referencing the Berkshire meeting or things that have been said about Berkshire or Buffett here. And so the first one, and this is for anybody who would like to volunteer because it's directed at the holdco or operating group level, and I'm again going to read it. We were intrigued by your comments last year about Charlie Munger and how he felt Berkshire should have used more financial leverage. How much leverage would you be willing to take on, again, holdco level or operating group level? And would you consider taking on leverage to do dividend recaps?

So I wouldn't consider taking on leverage to do a dividend recap at the Constellation level. I would, however, be happy if any of the operating groups wanted to do so, if they felt that was something that served their shareholders best. So I don't mind people experimenting with financial leverage at the sublevel. And partly that's because Constellation can act as the lender of last resort to those subsidiaries if we have to raise capital at the subsidiary level. So if Lumine decides that they're going to buy a huge underperforming telecom software business and leverages to the gills, I would encourage them to do so, just knowing that we at Constellation can underwrite that risk on their behalf. Knowing, however, that other shareholders share that risk and they should also be thinking the same way, that you might have to write a check if this goes south, if you want to remain undiluted at Lumine. So I'm pretty comfortable with management teams taking higher risks than I personally would take as part of trying to create significant wealth for themselves and their shareholders.

Anybody else? Anybody who's experienced with leverage and its appeal and limits? Robin or Jeff?

Yes. So at Topicus, we work with leverage, but it's still at very modest levels. We agreed upon that a couple of years ago. So I think I mentioned it before, the height of the debt, the structure of the debt, the quality of the companies you finance, all that kind of stuff you should take into account as well. So we take a look at it over time.

I think, Larry, we're -- we don't mind using leverage for some of the larger transactions. But I think if I look at how much capital we are generating are creating, our goal is to deploy that capital, not to just go out and use somebody else's capital. So I think until that maybe rebalances. I think using some to provide our return -- to get our return levels where we want them to be, I think, is a perfectly reasonable and useful tool. But fundamentally, our focus is on deploying our actual capital generated to earn high rates of return for our shareholders, and that's our focus.

I can think of an example that might be useful, instructive. Inside of Mark Miller's portfolio, we ended up with an investment, which we don't need to identify, which has a whack of debt in it, far more than we would be able to get from a third party, because they got into financial difficulty and we assumed the debt, pushed it out a very long way, put up a little bit of equity to show that we were acting in good faith, and have been working to turn that business around. Now I think that's something that may come back. Basically, other lenders are also in the position of not wanting to write things down, and hence, they extend and pretend. They push off the debt. They don't require principal repayments. They may drop the interest rate. Whatever it is to not take a current hit, they will do in some instances if we're willing to take the reins and put up some money to show earnestness. And Mark, how has that worked out for you?

It's worked out great. Tough turnaround, but it worked okay. And it put us in a unique position to pick up that business, right, because it was really suffering. And yes, you got to deal with the banks on it. They worked well. So yes, absolutely.

That can be a useful tool, Larry.

Yes. Coming up on the end of our meeting. So there are 2 more questions left. And again, anyone can opine. The penultimate one, I'm going to mostly read it verbatim but add a little bit. The shareholder wrote: Trust is clearly important in your decentralized organization. Buffett described this month in Omaha how much he and Charlie enjoyed the fact that people trusted them and cited it as a reason they both had worked so long. How important is trust to you? And I'd also note that, I think, Constellation as a company was listed as one of the most trustworthy companies in a reputable survey last year. How important is trust in your organization? And what initiatives have worked best in building trust in your business?

I mean I'll throw something out. I mean we've acquired hundreds of businesses in the Volaris portfolio over time. And you're acquiring a lot of those businesses from people who have spent a lot of their life, sometimes a few decades, building that business. And your ability for someone who you're discussing potentially doing it, acquiring their business, bringing their business onboard, it's important that they can call one of those people, and that how you've operated as a leader is consistent to trust and integrity. And that, you're far from perfect, but at least you do what you say you're going to do to the best of your ability. So I mean, for me, that's been very, very important to us. And it's helped us succeed and sometimes make things happen that wouldn't have happened because someone was willing to write a larger check for that business than we were. So I'll put that angle out for you there, Larry.

Yes. So like the commitment to permanence and autonomy. You can't really write that in a contract. Just you either live or don't, you develop a reputation. What about within the structure? I mean you push a lot of responsibility down to delegate deeply. You've got to be trusting the troops as well, right? It's a two-way street.

You can't grow your business in a decentralized conglomerate like we are with without giving things up, without letting people go, run with them and making mistakes and learning from those mistakes. You can't do that. And it's another form of building trust over time. I have to say some of our leaders do that better than others, right, that they're willing to give them that rope. And people do appreciate that. And some people don't do very well even though you're giving them that. And many do do very well. But that's really important as well.

I mean one of the architectural issues in an organization like ours is that you end up with a pyramid. And as you add -- as you get bigger, you add another layer to the pyramid. And if you don't have trust, you supplement with bureaucracy, right? You have guards watching the guards. And your bureaucracy grows in a geometric fashion with the size of the organization if it's multitiered. So you've got to have trust, otherwise bureaucracy eats you eventually.

How do you prevent, how do you mitigate that, Mark? What -- is it cultural? Are there actual tools that help an organization maintain that trust-based culture rather than a bureaucratic or red tape one?

Well, experience is part of it. I mean I trust the people with whom I work directly. Now they presumably, in turn, trust the people who work for them and, therefore, don't need to have the systems to monitor and control those people to any great extent. If they don't trust them, then they do need those systems and, therefore, the bureaucracy does grow. And so I think as trust grows, bureaucracy can shrink. Does bureaucracy naturally shrink? Generally not. So you have to go out of your way to shrink it. You have to go out of your way to lop off some of the bureaucracy periodically that surrounds you.

Yes. When your central headcount is growing proportionally to the size of our business, you've got a problem. Your bureaucracy is just going -- it's guaranteed. So it's just going to go up, up and up and up. Because those people, again, will just their grow their functions within it. So you've just always got to be pushing those people down, pushing them down and letting other people figure out how they want to spend their money rather than you becoming a big, central taxing authority downloading all those costs that you've built up over time. So you can see that's the key measurement, right?

Yes, that's a feature of what Buffett called the institutional imperative. And it requires permanent, relentless opposition. Well, we're really nearly out of time. Here's the final question. The writer -- I'm going to quote it, but -- and it's directed to Mark, but I think one of the great things about this group is it's an amazing bunch of investors really. And it says, this is a general question to Mark Leonard, if Mark answers general questions like Warren Buffett does. Then there are 2 questions really. What advice do you have for younger investors in choosing investments? And two, what are the most important red flags for you when you look at a company? So we'll start with Mark, but others should feel free to add or subtract.

Yes. I don't give investment advice. And obviously, focus is key to success. And so unless you were asking about vertical market software, I probably won't be able to help you anyway. And then in terms of red flags, if you're an investor as opposed to a speculator, I don't think there are a hell of a lot. If you're deep and you've studied what you're doing and you know your history, then whatever others would perceive as a red flag may well be an opportunity for you. Hard to give generic advice, isn't it? Boy, it kind of sucks. Anyone else want to give it a shot?

I'll give an add-on, Mark. And I, like you, don't give investment advice. And I always tell people when they're asking me about investment advice, is don't invest in what you don't understand. And they go and they spend hours and hours on the Internet to buy a pair of scissors and they'll spend 5 minutes with their broker to buy shares. And they should look at the balance sheet, income statement and understand it themselves before they make that investment. Otherwise, it's gambling.

Agreed. There are wonderful investors around our Board and around our group of managers. Many of them are very, very specialized, but some of them are also quite broad in terms of their investment skills. And it's wonderful to be in this environment where you have all of these terrific investors as constant feedback people on what you're doing. Creating that sort of environment where you are getting both feedback and learning is something that I think you should strive to do if you're going to be an investor.

Anyone else? Well, my 2 cents, I think what Dexter and Mark were just talking about, Buffett calls the circle of confidence. Know your boundaries and stay within it. And I'll finish with a quote from my stepfather. He said, surround yourself with great people because it's really hard to soar like an eagle when you're surrounded by turkeys. So with that, we'll thank the panel, thank my 2 co-moderators, and thank the 9 wonderful panelists today for an excellent meeting. And I'll declare the Q&A section closed and return the meeting to our Secretary, Mark Dennison.

Thank you, Will. Thank you, Howard.

Okay. Thank you, Larry. And that does conclude Constellation's question-and-answer session and today's Annual General Meeting. So I will hand the controls back to Computershare to finish the call.

Thank you. Ladies and gentlemen, this does conclude today's meeting. Thank you for your participation, and you may now disconnect.