Euro Small Cap Technology Stocks: A Conversation with Mansour Dia (Langdon Equity Partners)
Mar 2, 2025
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Mansour Dia, an investor at Langdon Equity Partners and former M&A analyst at Constellation Software, discusses the intricacies of software acquisitions and the opportunities within European small-cap tech stocks. He emphasizes the importance of cash flow over earnings and the value of personal relationships in investments. Mansour shares insights on the growth potential of firms like Topicus and Hypoport, and highlights how extensive travel aids in understanding local markets, ultimately leading to informed investment decisions.
Mansour Dia highlights the importance of cash flow over accounting earnings when evaluating software companies for investment.
He emphasizes the value of building relationships with software executives, which facilitates better acquisition opportunities and terms.
Mansour identifies the fragmented European tech market as an underappreciated landscape ripe for discovering high-quality small businesses with growth potential.
Deep dives
Mansour Dia's Experience at Constellation Software
Mansour Dia reflects on his time at Constellation Software, where he worked as an M&A and Corp Dev Analyst. He was initially drawn to the company due to its reputation as a leading investment firm in the software sector, which he had admired from a previous position at Blackreek Investment Management. During his tenure, he engaged with a comprehensive book of best practices, gaining insights into key ratios that define successful software companies. Mansour was particularly surprised by the high multiples Constellation was willing to pay for quality companies, highlighting a focus on practical business decision-making over just numbers.
Secret to Constellation's Acquisition Success
The podcast discusses the factors that enable Constellation Software to acquire businesses at high multiples successfully. Key to their strategy is the ability to structure deals thoughtfully, which protects them against potential risks such as customer concentration or legal issues. Relationship-building plays a crucial role, as much time is allocated to maintaining contact with software executives, allowing Constellation to be the first call when a company decides to sell. Additionally, their vast database of industry information provides them with insights that sellers may overlook, leading to better acquisition terms.
Team Structure and Deal Process at Constellation
Mansour shares that team structures within Constellation Software vary significantly, with experimentation being encouraged. He was part of a team that handled both business development and M&A, which included modeling potential acquisitions. Teams often focus on specific verticals but will adapt strategies based on market conditions, as evidenced by Mansour's pivot from the automotive sector to exploring various opportunities. The use of Salesforce as a centralized database helps teams track potential targets and measure conversion rates, optimizing staffing and resources for capital deployment.
Opportunities in the European Tech Market
Mansour details the opportunities he sees in the European tech market, emphasizing its fragmentation and the potential for uncovering hidden gems. He explains that while the market may not be perceived as growing rapidly, there are numerous high-quality small businesses with substantial potential. Mansour points out that many investors tend to overlook Europe, focusing primarily on the U.S., which creates an advantage for those willing to take the time to explore. This approach opens the door for finding value in European tech firms, which may be undervalued compared to their U.S. counterparts.
Mansour's Transition to Langdon Equity Partners
After leaving Constellation Software, Mansour joined Langdon Equity Partners at its inception, driven by his desire to focus on smaller companies with high returns. His journey included a fortuitous discovery of a job opportunity while traveling back from a wedding, which led to a connection with the firm’s founders. His role focuses on tech small-cap investments in Europe, including firms he previously tracked, such as Topicus. Mansour emphasizes that his investment strategy remains consistent, seeking out companies with a strong potential for organic growth in underappreciated markets.
In this conversation, Mansour Dia shares his journey from Constellation Software to Langdon Equity Partners, discussing the intricacies of software acquisitions, the importance of building relationships in the investment world, and the unique opportunities present in the European small cap tech landscape. He emphasizes the significance of cash flow over accounting earnings and the value of extensive travel for gaining insights into local markets. Mansour also introduces Chapters Group, a new venture focused on vertical software.
This content is for informational purposes only, and should not be construed as offering of investment advice or stock recommendations. This content is based on the author's independent analysis and research and does not guarantee the information's accuracy or completeness. The information contained in this video is subject to change without notice, and the author assumes no responsibility to update the information contained in this video. All information contained herein this video should be independently verified with the sources and companies mentioned. The author is not responsible for errors or omissions. The author does not purport to tell or suggest which investment securities viewers should buy or sell for themselves. Those viewers seeking direct investment advice should consult a qualified, registered, investment professional. The author is not a professional or financial advisor, and does not provide financial advice. Viewers are advised to conduct their own due diligence prior to considering buying or selling any stock. The author will not be liable for any loss or damage caused by a viewer's reliance on information obtained in any of this content. It’s important to understand that investing involves risk, including loss of principal. The author is not engaged in any investor relations agreements with any of the publicly traded companies mentioned. The author does not receive compensation of any kind from any publicly traded companies that are mentioned in any of this content. The author has acquired and may trade shares of some of the companies mentioned through open market transactions and for investment purposes only. Refer to the “author’s ownership disclosure” where applicable. There may be affiliate links to Amazon, and other companies in which the author is compensated if any of the affiliate products are purchased from Amazon.ca/.com or any other companies.
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