Constellation Software founder Mark Leonard and Vertu Capital founder Lisa Melchior at a venture capital conference in 2022. Mr. Leonard has announced he is stepping down for unspecified health reasons.Sean Silcoff/The Globe and Mail
Mark Leonard told Constellation Software Inc. CSU-T investors in April, 2015, why he’d decided to stop taking a salary. Mr. Leonard, who’d founded the company two decades earlier, wanted to live a more balanced life, he wrote in his annual president’s letter.
Instead of flying in economy and staying at modest hotels at company expense – because, as he put it, “I wasn’t happy freeloading” on shareholders and wanted to set an example for employees – he preferred to spend his own money travelling “for comfort, convenience and speed.”
“So, I’m afraid you’ll mostly see me in the front of the plane from here on out. I love what I’m doing, and don’t want to stop unless my health deteriorates or the board figures it’s time for me to go.”
Constellation Software holds call to address investor concerns about AI
On Thursday, in news that came as a shock to the market, Mr. Leonard announced he was stepping down effective immediately for unspecified health reasons, ending a three-decade run as one of Canada’s most successful company builders and capital allocators. Mr. Leonard, who is in his 60s, is being replaced by chief operating officer Mark Miller, an early Constellation employee. Mr. Leonard will remain a board director.
Constellation’s shares, which have been under pressure this year over concerns about how artificial intelligence might affect the many software companies it owns, closed down 5.95 per cent on the Toronto Stock Exchange. The share price is now down 12.45 per cent since the start of the year, while the S&P/TSX Composite Index has gained 20.2 per cent over that period.
Mr. Leonard did not respond to an e-mailed request for comment but stated in a news release he had “complete confidence” in Mr. Miller to lead the company, describing him as a trusted, experienced adviser and a driving force within the company’s leadership team
BMO Capital Markets Thanos Moschopoulos called Mr. Leonard “irreplaceable” in a note but added that the company’s “highly decentralized structure and bench strength should mitigate the impact associated with this transition.”
Before this year, Constellation was one of the steadiest growing companies on the Toronto Stock Exchange, delivering 30-per-cent-plus annual returns on average since it went public in 2006.
Mr. Leonard built Constellation into a technology juggernaut with a disciplined approach, buying well over 1,000 software companies.
Target companies were typically well run and stable, often led by their founders, having loyal customers, and facing little to no competition catering to specific industry niches. The companies typically generated less than US$10-million in annual revenue. Rolled up together, they generated US$5.5-billion in revenue for Constellation in the first half of 2025 and US$258-million in net income.
“What is special about Constellation is not the underlying technology or the businesses, but the business model,” said John Ruffolo, a Bay Street financier who has known Mr. Leonard since the 1990s. “He saw value where no one could. These were not the hot companies, they were in many cases those that people just forgot about or where they didn’t appreciate the value.”
Mr. Leonard’s focus on long-term value for shareholders often drew comparisons to fellow billionaire Warren Buffett, and Constellation inspired a myriad of copycat software consolidators.
The iconoclastic Mr. Leonard has routinely declined media requests and has rarely been photographed.
Tall and powerfully built, like a linebacker, with a deep voice and British accent, Mr. Leonard exuded a fierce intelligence as a corporate leader, reflecting his deep read of global trends and commanding knowledge of his business.
He is known for being tart and bracingly frank in dispensing with trivial questions. But he has also been perennially curious and open to changing his mind based on convincing data.
He also sports an exceptionally long, Gandalf-like beard and dresses casually, very different from the Bay Street denizens in sharp suits who idolize him.
Constellation follows other uncommon practices. It doesn’t issue stock options to employees and has eschewed share buybacks – a practice Mr. Leonard considers unfriendly to shareholders. It pays a slim US$1-a-share quarterly dividend on a stock worth thousands of dollars and backed away from paying special dividends a few years ago after shareholders indicated they preferred to see Constellation deploy the cash instead.
Constellation frequently wasn’t the highest bidder on deals but prevailed because sellers cared about the future of their businesses and saw it as “a good home for assets,” Mr. Moschopoulos said.
While he kept a low public profile, Mr. Leonard readily spoke to and mentored students. He was always willing to address shareholder questions during marathon public meetings that could run for three hours, often deferring to his coterie of executives who ran Constellation’s six decentralized business units.
Mr. Leonard would also periodically respond publicly to shareholder questions as they arose, including this week, when he hosted a question-and-answer session about generative AI, at the request of a large shareholder.
During the call, Mr. Leonard did not provide much clarity, and at times was dismissive of the potential disruption the tools could pose to Constellation’s underlying business. The stock fell.
Mr. Moschopoulos said in a note the “bear thesis” on Constellation would “only be disproved through the passage of time,” but added it was well positioned to be a net beneficiary of AI.
Constellation’s prior rise had been a boost for the TSX, establishing it as the exchange’s second-largest information technology company behind Shopify and one of the country’s 10 most valuable companies at its peak.
Mr. Leonard earned a bachelor of science at University of Guelph and an MBA from Western University, starting out in banking before joining Ventures West Capital Ltd. as a venture capitalist in the 1980s.
But after 11 years, Mr. Leonard considered himself to be an unsuccessful venture capitalist. He disliked the business model that saw VC firms invest for just a few years before selling out and found it difficult to be an expert in a broad range of sectors.
He was more interested in buying companies he liked in focused areas and holding them. He studied other successful consolidators and was heavily inspired by Canadian entrepreneurial legend Roy Thomson, whose descendants own The Globe and Mail.
Mr. Thomson created his fortune by rolling up local newspapers that served small communities and faced little or no competition. That was the model Mr. Leonard pursued. Instead of buying newspapers, he purchased software vendors that catered to industry niches, like golf-course operators or public transit, which provided mission critical functionality and had little competition, high recurring revenues, solid cash flows and operating profits. Constellation would apply best practices from across its portfolio including raising prices.
Constellation started with $25-million in seed capital from OMERS and former associates at Ventures West Capital. Despite its success, large shareholders pressed for a sale of the company in the early 2010s, which didn’t come to pass.
Constellation remained known for its cost discipline. During the COVID-19 pandemic bubble, tech investors often paid 15 times or more current revenues for software acquisitions. Constellation didn’t disclose acquisition multiples, but Veritas Investment Research estimated Constellation paid an average of only 0.8 times.
Until the rise of AI-related concerns, Constellation had often faced questions about how long it could continue to successfully pursue its M&A strategy. Mr. Leonard also continually prodded his managers to improve Constellation’s low organic growth, or year-over-year revenue gains from existing businesses.
In recent years, the company bought larger assets, typically carve-outs of big companies, and spun out two units into publicly traded subsidiaries, Topicus.com TOI-X and Lumine Group Inc. LMN-X Constellation also established a venture capital unit to encourage its more ambitious employees to stay and build faster-growing companies.
Mr. Leonard, who was always open to experimenting, even briefly considered deploying US$1-billion into the oil industry when energy prices crashed a few years ago.
In the news release on Thursday, Constellation chairman John Billowits wished Mr. Leonard a swift and full recovery, crediting his “visionary leadership, humility and wisdom” in guiding the company.
With a report from Joe Castaldo
Editor’s note: A previous version of this story referred to Mark Leonard as former CEO of Constellation Software. Mr. Leonard was president of the company, not CEO.