Eric Andrews
Eric Andrews
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Constellation Software Business Analysis | Finance Case Study
In this finance case study, I show you how Constellation Software has been valuing and acquiring hundreds of vertical market software businesses at bargain prices since the mid-1990s to build a $8B+ revenue behemoth. One-of-a-kind business, you won't want to miss it!
🚀 If you want to master the finance skills & frameworks to successfully scale technology startups, secure your spot in my "Finance for Startups" program, today: www.ericandrewsstartups.com/financeforstartups
Communities:
💼 Linkedin: www.linkedin.com/in/eric-andrews-1624b656/
☑️ Twitter/X: eric__andrews
🌟 Instagram: ericandrews_startups
🔥 Discord: bit.ly/discord_eric
💻 Newsletter: bit.ly/joinericnewsletter
🎥 Clips: czcams.com/channels/bM6zM3al9jZSyoRyJWQL-Q.html
Related Videos:
🚩 7 Most Important SaaS Metrics: czcams.com/video/9ViZZ4MZTPs/video.html
🚩 SaaS Financial Model Tutorial: czcams.com/video/C7S6lXu4NS4/video.html
🚩 Finance for SaaS Playlist: czcams.com/play/PLdoBuNNnCmdUQvTBTw4hB_Gp59i5mLmQZ.html&si=eWB7gGEr3p-8QcTs
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In this video, we walk through the valuation framework that Constellation Software has been using to acquire low or even negative-growth vertical market software (VMS) businesses for the last 30 years.
We also model out how they re-invest their free cash flow into new acquisitions and build a projection for how quickly they might grow revenue and free cash flow over the next five years if they can keep this pace.
SECTIONS:
00:33 Constellation Software history & Mark Leonard - original business thesis on acquiring low-growth VMS businesses
1:55 Constellation Software business strategy, and valuation framework, hurdle rate targets, and example of valuation
4:22 hurdle rate targets & deal success rates
5:23 example valuation of three different businesses using Constellation Software hurdle targets
7:19 other interesting facts about Constellation - no earnings calls, no debt, never increased share count
8:15 unique executive compensation structure, organic growth rates, acquisition volume
10:08 revenue & free cash flow forecast for Constellation Software on how quickly they can grow if they keep re-investing all capital at historical multiples
If you have questions - leave a comment below and I'll try to help. Cheers!
#constellationsoftware #casestudy #financecasestudy #saas
zhlédnutí: 960

Video

10 Subscription Box Growth Strategies You’d Be INSANE Not To Use in 2024
zhlédnutí 829Před 2 měsíci
I show you 10 of the most successful tactical growth strategies I'm seeing subscription box businesses use to achieve massive scale and increase customer lifetime values in this exclusive @eric_andrews x @OrdergrooveOfficial webinar recap. ➡️ Book a demo with Ordergroove ► www.ordergroove.com/eric/ (use this link or mention me to be eligible for 10% off your annual contract) Ordergroove powers ...
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zhlédnutí 1,2KPřed 3 měsíci
In part 2 of our subscription box financial model series, I show you how to build the full income statement, inventory forecast, and cash flow projections for your DTC eCommerce business. Free Excel template included. 🔥 Part 1: czcams.com/video/ZkOr_xy1rgY/video.html ➡️ Book a demo with Ordergroove if you want to learn how to build a $100mm recurring revenue DTC business ► www.ordergroove.com/e...
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zhlédnutí 3,5KPřed 3 měsíci
I show you how to build a subscription box financial model in Excel for your DTC eCommerce business. Free Excel template included. 🔥 Watch part 2 here: czcams.com/video/hHN90qypb2g/video.html 🔥 Subscription box strategy webinar here: czcams.com/video/_Y_aMwr_5P8/video.html ➡️ Book a demo with Ordergroove if you want to learn how to build a $100mm recurring revenue DTC business ► www.ordergroove...
How to Calculate Churn Rate | Subscriptions 101
zhlédnutí 3,4KPřed 5 měsíci
I show you how to correctly calculate churn rate for a subscription business. Free Excel model download included if you want to plug in your own numbers. ➡️ Book a demo with Ordergroove to take your customer retention and recurring revenue to the next level ► www.ordergroove.com/eric/ (use this link or mention me to be eligible for 10% off your annual contract) 👉 Follow Ordergroove on LinkedIn ...
How to Calculate CAC Payback Period for Subscription Businesses
zhlédnutí 2,2KPřed 6 měsíci
I show you how to correctly calculate the CAC payback period for a subscription business using cohort analysis. Free model download included if you want to plug in your own numbers. ➡️ Book a demo with Ordergroove to take your customer retention and recurring revenue to the next level ► www.ordergroove.com/eric/ (use this link or mention me to be eligible for 10% off your annual contract) 👉 Fol...
The Ultimate SaaS Unit Economics Tutorial
zhlédnutí 6KPřed 9 měsíci
I teach you why SaaS unit economics are so important and how to calculate the key metrics like LTV, CAC, payback period, and more. ✅ SaaS Unit Economics Template Download: mailchi.mp/ericandrewsstartups/fooyqcg5cp 🚀 If you want to master the finance skills & frameworks to successfully scale technology startups, secure your spot in my "Finance for Startups" program, today: www.ericandrewsstartup...
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zhlédnutí 4,1KPřed rokem
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zhlédnutí 4,9KPřed rokem
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Komentáře

  • @Aira.Padilla
    @Aira.Padilla Před 14 hodinami

    Hi Eric, I am a new ecom biz owner still getting my fit in the industry so I really appreciate these videos you are making. I've been binge-watching your video to learn all this stuff. Thank you so much for giving us all this info!

  • @supercarlitos2006
    @supercarlitos2006 Před 3 dny

    This is exactly what I needed. Thank you so much for sharing this.

  • @angelinamarch2005
    @angelinamarch2005 Před 4 dny

    I’m having trouble building the first table from the dataset (a step back from what you’ve shown)!! can’t find the right formula!

  • @DimitriGaldava-yi1rz

    Thank you for the video, however I had to pay $5 for it even video says for free, but I dont mind.

    • @eric_andrews
      @eric_andrews Před 5 dny

      @DimitriGaldava-yi1rz i had to start charging a small fee for it recently to support my rising software costs. Thank you for understanding and I hope it helps you a lot!

  • @LakshKaushik-s2r
    @LakshKaushik-s2r Před 8 dny

    @is forecasting of this analysis / Net sales also possible further? And what methods will be most suitable?

  • @nicolem.williams5511

    This information is so valuable, and I really appreciate the complete breakdown. Your channel is helping me so much. Thank you!!

    • @eric_andrews
      @eric_andrews Před 5 dny

      @@nicolem.williams5511 my pleasure!!! Thanks for the comment

  • @godislove8831
    @godislove8831 Před 11 dny

    Hi Eric , My name is Surprise i was searching questions and answers for an administrator finance position and i bumped into your video where you were explaining about finance interview 3years ago, you know how to explain and I was impressed , so i would like you to help me to understand Administrator finance position and duties , what are the questions and answers. I would be very happy if you help me , thanks in advance.

  • @godislove8831
    @godislove8831 Před 11 dny

    Hi Eric , i am going to interview for Administrator finance i would like you to help me with questions and duties for this position.

  • @raulsiqueirayt
    @raulsiqueirayt Před 13 dny

    Very great video Eric! Thank you so much :)

  • @adorable_writes
    @adorable_writes Před 14 dny

    Finally after 4 days I have completed this model I have spearing no efforts to learn Financial Start up Models Thanx a lot to upload such a valuable content lot of love from India

  • @Ayush-bc2kz
    @Ayush-bc2kz Před 15 dny

    Great Video Eric. I am wondering in a more real world scenario - an ecommerce store has 100's of SKU's how would we proceed in calculating contributional margin for the same?

  • @soundaryasuresh1845
    @soundaryasuresh1845 Před 15 dny

    How to assume future revenue growth based on historical data in income statement

  • @RicardoRodriguez-y6p
    @RicardoRodriguez-y6p Před 16 dny

    This was awesome to watch and use. I am also looking to benchmark L&D NPS in the healthcare industry. Any sources you can point me to?

  • @michaelstopperich8528

    How can I calculate the churn if a customer is paying a flat fee for my service and, depending on the service, they could be an active customer for 2+ years?

    • @eric_andrews
      @eric_andrews Před 16 dny

      @@michaelstopperich8528 so they are locked in to 2 year contracts?

    • @michaelstopperich8528
      @michaelstopperich8528 Před 16 dny

      @@eric_andrewsThey are locked into a contract yes, but the terms vary. Some pay the full balance of the service when they sign the agreement and others make payments for 3 to 10 months. But once the customer is done paying, its very likely they will remain an active customer for a period of time. Could be months could be multiple years.

    • @michaelstopperich8528
      @michaelstopperich8528 Před 16 dny

      They are locked into contracts, but terms vary. I sell Immigration Legal Services, so you could sign up for a $10,000 service, pay $2,000/month for 5 months then we send your application to USCIS (the government) to be reviewed and either "Approved" or "Denied". But its realistic we don't receive an answer of approval or denial for 6 to 12 months. This is where i'm getting stuck on how to calculate the churn.

    • @eric_andrews
      @eric_andrews Před 16 dny

      @michaelstopperich8528 yes the thing you're getting stuck on is you are trying to use "churn rate" for a business that is not a subscription. I have a video on this here but basically i would just be focused on LTV per customer, churn only really applies to subscription businesses where people are actively canceling the service which is different czcams.com/video/2QY_1ATyTOU/video.htmlsi=xr67SIQU2H0tSRsX

  • @michaelstopperich8528

    How can I calculate the churn if a customer is paying a flat fee for my service and, depending on the service, they could be an active customer for 2+ years?

  • @Tiffanyonfire
    @Tiffanyonfire Před 17 dny

    Hi Eric~great work~can I know where I can download the Excel?

  • @TheWeb3TV
    @TheWeb3TV Před 17 dny

    How do we get the framework excel file used in the video ?

  • @AlternativeInvestor
    @AlternativeInvestor Před 18 dny

    AI short

    • @eric_andrews
      @eric_andrews Před 18 dny

      @@AlternativeInvestor haha, i wish. That would save me a lot of work

  • @tanupreet.chadha
    @tanupreet.chadha Před 18 dny

    Unemployed, how do i buy that model. Give it for free!

  • @eric_andrews
    @eric_andrews Před 18 dny

    Watch the case study here: czcams.com/video/BrZYwkc2SvM/video.html

  • @SyedHassanRazaJafri
    @SyedHassanRazaJafri Před 18 dny

    They are extremely efficient. I worked in Constellation Software Inc. for 5 years. Amazing model amazing growth!

  • @saadAlshweaer
    @saadAlshweaer Před 19 dny

    Hello Eric, I appreciate the content being provided very much, but may I know how companies or agencies that provide subscription services for online stores and SAAS receive wages from the stores? Do they take a percentage of the sales of their subscriptions or do they receive an amount each month?

    • @eric_andrews
      @eric_andrews Před 19 dny

      @saadAlshweaer it depends on the company. A mix of both, but lower-end products usually do a monthly fee, where some of the more enterprise level softwares do a % of sales or they increase pricing based on usage which is similar.

  • @duncanmahood2878
    @duncanmahood2878 Před 20 dny

    "The whale only gets harpooned when it surfaces." 💯

  • @JasonAmir-qo4uo
    @JasonAmir-qo4uo Před 20 dny

    What do you think of Constellation Software's (CSU) business model?

    • @RoseBalerus
      @RoseBalerus Před 20 dny

      Is that a new established strategy?

    • @GibsonJames-gr3on
      @GibsonJames-gr3on Před 20 dny

      I like their diversified portfolio of software companies. Their acquisition strategy is impressive, over 100 companies acquired!

    • @RobertDamanii
      @RobertDamanii Před 20 dny

      How do they manage so many different software brands?

    • @John-ww2fv
      @John-ww2fv Před 20 dny

      They invest heavily in R&D, driving innovation. Their decentralized approach gives each company autonomy.

    • @RubenDominguez-ei3fd
      @RubenDominguez-ei3fd Před 20 dny

      That's smart, allowing them to maintain their unique cultures. What about their organic growth strategy?

  • @syedjawaadali9841
    @syedjawaadali9841 Před 20 dny

    You nailed it bro! All covered in 23 minutes. Kudos!

  • @juliemcdermott7521
    @juliemcdermott7521 Před 21 dnem

    excellent

  • @Buy_YT_Views_897
    @Buy_YT_Views_897 Před 21 dnem

    🤯

  • @LennyYT
    @LennyYT Před 21 dnem

    Interesting. I'd love to know what they bing to the table to turn these companies around.

    • @eric_andrews
      @eric_andrews Před 20 dny

      I think they help with some basic benchmarking, budgeting, etc, but my understanding is that they just let the companies run mostly. They don't really need them to do anything different because of the multiples they buy them at.

    • @LennyYT
      @LennyYT Před 20 dny

      @@eric_andrews this is next level. Why Hormozi is not all over this? 😂😂😂

    • @eric_andrews
      @eric_andrews Před 20 dny

      @LennyYT haha ya, they keep an amazingly low profile but can't hide forever i think they are like 10th largest company on canadian stock exchange now

  • @firte3899
    @firte3899 Před 21 dnem

    Thanks for putting out great videos on software and finance

  • @End_rick997
    @End_rick997 Před 21 dnem

    I'm new to trading, and I've lost a good sum trying out strategies I found in online tutorials. I would sincerely appreciate any recommendations you have.

  • @eric_andrews
    @eric_andrews Před 21 dnem

    What else do you know about Constellation Software? There is much more to unpack than I covered today, please share below!

  • @oluseyiolojede5619
    @oluseyiolojede5619 Před 22 dny

    Financial modelling simplified

  • @Neeltje_Schoenmaker
    @Neeltje_Schoenmaker Před 23 dny

    Thanks, ou explain it so to the point, very helpful

  • @LennyYT
    @LennyYT Před 25 dny

    This is awesome 🎉 can you share more context on how your client converted so high for a generic giveaway prize? What was the follow up and other secondary strategies like? 🙏

  • @medhatibrahim5447
    @medhatibrahim5447 Před 26 dny

    We have a Monthly and Annual Subscriptions the annual is amortized Over 12 Month to have our Monthly Revenue . So in Jan. 2024 to calculate the ratios should i add YTD December + Jan Revenue and start calculating the ratios? . Your Excel Line 66 is accumulated Figures or the Monthly revenue of every Month Only

  • @nitishdhawan1297
    @nitishdhawan1297 Před 28 dny

    This is one of the best videos on the interpretation of customer cohorts.

  • @Raphaelcelestin
    @Raphaelcelestin Před měsícem

    Bro you killed it... Everyone only talks about easy stuff but the real stuff no one talks about it.. Thank you!

    • @eric_andrews
      @eric_andrews Před měsícem

      Haha thanks. That is my goal, glad it was helpful

  • @jyothishwarriar
    @jyothishwarriar Před měsícem

    But we are still spending CAC on not retained users , so how do we say 115$ CAC is no problem.

    • @eric_andrews
      @eric_andrews Před měsícem

      You just compare it to the LTV, lifetime CAC vs. lifetime gross profit.

  • @LennyYT
    @LennyYT Před měsícem

    How do you track and separate organic from paid results successfully?😊

    • @eric_andrews
      @eric_andrews Před měsícem

      It is much harder than it used to be, nobody has a perfect answer. As one of my marketer friends says "if I had a perfect attribution model I'd be a billionaire", haha. Depends on the channel. Good test is to pause paid campaigns and see what happens. Also a lot of attribution software like Elevar (for FB) that can help. Need to compare all your analytics and try to get as close to attribution as possible.

  • @LennyYT
    @LennyYT Před měsícem

    Awesome 🎉 you'd us this knowledge the same today or has things changed?

    • @eric_andrews
      @eric_andrews Před měsícem

      Yep these are the classic metrics, I'd still use them. Only thing is that since all the privacy tracking has been rolled out the paid vs. blended CAC is a bit harder to differentiate. But CAC is still key to understand.

  • @davidjakubowicz9921
    @davidjakubowicz9921 Před měsícem

    The avg number of months to profitability per customer seems like its an important metric, does it have a name? (Ie 3 months in your example ar the very end of the video)

  • @oriehi_raphael_paul
    @oriehi_raphael_paul Před měsícem

    Great video!

  • @BenChipman-zw5mq
    @BenChipman-zw5mq Před měsícem

    Thanks Eric, walking through it month by month helped me see my mistakes!

  • @akcireneri
    @akcireneri Před měsícem

    How can I calculate the required promoters to achieve a certain NPS target based on the existing survey?