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Company. Constellation Software: The Business of Buying Software Businesses
The Synopsis
Invest for Growth, Accept Delayed Returns
Investing in software companies emphasizes growth over immediate margin, requiring a shift from traditional CapEx to spending on Sales & Marketing (S&M) and Research & Development (R&D). While such investments may initially impact margins and Return on Invested Capital (ROIC), they are crucial for driving revenue growth. A strategic focus on internal growth initiatives allows for greater investment at a lower hurdle rate, acknowledging the trade-off between margin reduction and long-term growth expectations.
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