Valsoft | The rhinoceros in Montreal looks to the stock market

A young software company in Montreal that received a billion-dollar valuation after just six years of existence continues its impressive growth and plans to make a jump in the stock market next year.

Posted at 6:00 AM

Richard Dufour

Richard Dufour
Journalism

Valsoft is a company founded by Sam Youssef and Stéphane Manos, two former Concordia University computer engineering students who previously befriended Cégep Vanier.

The company, whose offices are located along the highway in the Saint Laurent neighborhood, made its first acquisition in 2016. The transactions have followed each other since then, so much so that Sam Yusef noted that today Valsoft has approximately 2,500 employees “worldwide.” “.

He argues that Valsoft could end the year buying 25 companies in 2022, bringing the number of purchase transactions to 55 since the company began operations six years ago. We’ve made about fifteen acquisitions so far this year, and our turnover should be around 300 million by the end of the year. »

The 40-year-old entrepreneur says he realized consolidation potential in the software industry after first investing in shares of publicly traded companies like Constellation Software and Salesforce, among others.

Inspired by CGI and Couche-Tard

“The interest in software companies immediately grew,” says the Lebanese-born Montrealer.

It is a fast growing sector. Firms that specialize in specific niches can control prices in their markets and many generate significant recurring revenue. »

When analyzing the opportunity, he says, “we also considered Warren Buffett and Quebec entrepreneurs who have successfully made acquisitions, for example Alain Bouchard, of Couche-Tard, and Serge Godin, of CGI.”

“In Quebec, the market structure and tax rules are very favorable for companies to make acquisitions abroad and we have seen the potential for consolidation in the software sector.”

Sam Yusef estimates that 30,000 companies worldwide design software for niche markets (boutique hotels, forestry companies, etc.).

“We are looking at all the small vertical markets where you can have scale Pricing power. »

The results seem to prove it correct. “Six years later, our fortune has reached over a billion since the Viking investment,” he says.

Eyes on the stock market

At the beginning of the year, the Montreal company announced that US investment fund Viking was injecting $100 million into Valsoft for a 10% stake.

Valsoft remains little known in Quebec, says Sam Yusef, “but it is well known in private investor circles in the United States and elsewhere in the world.”

He claims to have received interest from several companies. “But the people at Viking explained to us how they could help us develop our potential and talked to us in a way that convinced us. Until then, we worked mainly with our original partners’ money and those from acquired companies.”

call him JournalismViking management politely declined our request for an interview, but nevertheless stated that they would read our report “with interest”.

Sam Yusef says the Viking investment is helping Valsoft grow faster. So much so that Valsoft is considering taking another step.

“It is believed to complete an initial public offering by the end of 2023 or the beginning of 2024,” he says.

If the two founders remain the major shareholders in Valsoft, there are about 25 other private investors in the capital, most of whom are company employees, Sam Yusef says.

“We have more opportunities than we have money today. Our IPO could bring in capital, which will help us grow faster. In addition, many of our investors and employees would like to have this liquidity option offered by the exchange.”

Pornography as a starting point

At the end of their college years in the early 2000s, the two founders of Valsoft set out to affiliate marketing and manage websites, some of which are for adults and a particularly household name today. : Bournehub.

Sam Yusef and Stefan Manos combined their activities into a company called Mansef (a combination of my two entrepreneurial names).

“Adult products made more money than other products. But after five years, he became a big part of the company and we weren’t comfortable with the industry, so we sold it,” says Sam Yusef.

“We wanted to do something else with our lives,” he adds, without wanting to reveal the selling price out of respect for his partners at the time.

Realizing the delicacy of the topic, Sam Youssef also prefers not to comment on what Pornhub has become and the allegations of sexual exploitation associated with it.

“It is a completely different company today. It has nothing to do with who we created. By selling in 2010, we turned the page.”

Since the year following the sale, in 2011, Sam Yusef moved to the exchange with partners to invest and identify the opportunities that led to the creation of Valsoft.

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