Valsoft, a Constellation copycat led by Pornhub co-founding investors, raises US$170-million in growth capital
The Montreal company has bought up dozens of small, slow-growing but stable software vendors around the world
Canadian investment fads come and go – think income trusts, cannabis and junior mining – but one trend never goes out of fashion: the rollup. There have been many successful sector consolidators (Alimentation Couche-Tard ADT-T, Constellation Software CSU-T, Open Text OTEX-T and Stella Jones SJ-T), but also several flameouts (Valeant Pharmaceuticals, Loewen Group and Philip Services).
The latest serial acquirer to rise to prominence is Valsoft Corp. The nine-year-old Montreal company, led by two entrepreneurs in their early 40s, Sam Youssef and Steph Manos, are trying to emulate Constellation’s successful playbook. Valsoft has bought up dozens of small, slow-growing but stable software vendors around the world that dominate a range of modest industry subsectors. Valsoft owns nearly 100 companies, generates upward of US$450-million in revenue and earns about 25 per cent to 30 per cent operating profits, the company says.
On Friday, Valsoft said it had raised US$170-million in debt to fuel further acquisitions in a deal led by U.S. investment giants Viking Global Investors – which bought a minority stake in the company for US$150-million in 2022 – and Coatue Management LLC. The company also has a line of credit of between $150-million and $200-million with a syndicate of Toronto-Dominion Bank, Bank of Montreal and National Bank of Canada.