4/4/2011-A quiet transition in wake of DMS acquisition

New owners allow seasoned management team to lead software company
The acquisition of Ideal Computer Systems came quietly in late November.
Neither Ideal, nor its new owner, Constellation Software Inc., released news of the purchase on their websites nor did they send out press releases. Clients of Ideal likely didn’t notice a difference either, as the only major change came in the owners. Ideal’s management and support staff have stayed intact, and few changes have been made.
“Our focus is essentially the same, providing the best software and customer support to our customers,” Ideal’s sales manager Greg Carradus said in an interview with Powersports Business.
Constellation purchased Ideal as previous owner Dennis Haefner was nearing retirement. Haefner, who is in his late 60s, had been with the company for 25 years.
“Constellation actively looks for companies that are looking for some sort of exit strategy,” said Sean Raynor, who works in business development for Constellation. “A very typical exit strategy for software companies of this size is typically you have an owner or proprietor, and they’re coming close to retirement or want to do something else, and that’s what happened here.”
Constellation is a $500 million publicly traded company that acquires software companies. It has bought about 100 companies in a dozen sectors over the past 10 years.
Ideal fit its criteria because Haefner was retiring and because of the company’s success and potential for growth. Ideal is No. 1 in market share in the outdoor power equipment industry and No. 2 in powersports, Raynor said.
“They have market leader position and a lot of happy customers, so that combination is very attractive to Constellation,” he added.
Along with some of the obvious benefits of acquiring the company, Constellation also found an experienced management team, which combined has more than 50 years experience.
“We always look at the actual capabilities of a management team, what a management team actually is doing, and we’re very fortunate to have some long-standing and very capable people in that group,” Raynor said.
That management team has stayed on with Ideal and will continue to run the day-to-day operations of the company.
“Essentially what Constellation does is it provides both capital, investment capital, as well as apply best practices that we’ve learned from the other 100 acquisitions that we’ve done over the past 10 years,” Raynor said.
Constellation will serve as an adviser to Ideal, while allowing the company to continue normal operations.
“The key is to implement best practices that make sense for Ideal and Ideal’s marketplace and also not lose the practices that make Ideal succeed,” Raynor explained. “Ideal has very high customer satisfaction and extraordinary support capabilities. We don’t want to mess with their special sauce.”
Carradus admits he was initially concerned about the acquisition and its effects on the company and its employees, but now that the new ownership has been in place for four months, he said he’s happy with the direction the company has taken. “We’re having the ability to take our support that is well-received in the industry already and taking it to the next level and having Constellation helps us do that,” he said.
Ideal’s customers will notice little change as a result of the acquisition. Ideal will continue to aim to create a competitive product, and the only major change that will occur is with the company’s customer satisfaction monitoring.
“One of the things we want to do is measure customer satisfaction on a monthly basis with anyone that works with us,” Raynor said. “That should have an impact on our customers for the better.”
A long-term view
Constellation’s future with Ideal is likely to be long term, as that is the approach the company takes, Raynor said. Constellation is also looking to expand its powersports presence with other companies.
“We’re focusing on the markets where is there is growth opportunities,” Raynor said, “and powersports is one of those, we believe.”
Its dealer group, which includes Integrated Dealer Systems (IDS) and Constellation Automotive Software (CAS) along with Ideal, continues to grow.
“We’re actively pursuing other investment opportunities in the dealer network, so other powersports dealer software companies, other RV and marine software companies, other automotive (companies). Anything that’s dealer-centric, we’re looking at and talking to,” Raynor said.
Constellation is currently looking at about 150 vendors that would fit into the dealer group, and it hopes to acquire one or two dealer service companies annually. PSB

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