The common pushback against a Constellation Software long thesis is threefold:

1. AI disrupts software 
2. They can’t continue to deploy FCF into M&A
3. And when the M&A machine stops, this is a mature, slow-growing (read: dying) software business with 1-2% organic growth. This doesn’t deserve a premium multiple.  

Putting aside the AI risk, which we explore in multiple interviews, we've been exploring questions two and three. More specifically: if the M&A machine significantly slows, does CSI have the expertise internally to drive organic growth? 

From 2010-24, organic revenue growth was ~1.5% per year. Adjusting for inflation and the Year-1 post-acquisition jump from re-pricing and cutting cost, the stable organic growth for the core portfolio is arguably negative YoY.