The shared playbook of LVMH and Constellation Software
What LVMH and Constellation Software have in common: Same game, different stage
We just wrapped up a podcast episode with Sonny from
, diving deep into LVMH, the crown jewel of global luxury. But during our 80-minute conversation, talking through the strategy, something caught our attention: LVMH reminds us a lot of Constellation Software.Different industries. Different products. Entirely different consumers. But oddly… the same playbook (sort of).
Before we explain what and how, we must first understand and know both companies on a basic level.
LVMH
LVMH (Moët Hennessy Louis Vuitton) is the world’s largest luxury goods (holding) company. It owns over 75 premium brands, called Maisons, spanning fashion, jewelry, wine, cosmetics, and retail. Think: Louis Vuitton, Dior, Hennessy, Sephora, Tiffany, TAG Heuer, and Dom Pérignon.
Constellation Software
Constellation Software is a Canadian software (holding) company most people (besides investors) have never heard of, but have come into contact with through one of their thousand software solutions. Instead of luxury brands, they acquire niche, vertical-market software companies.
These are often small, sticky, profitable businesses that dominate in obscure niches, like regional tax systems or marina management software. Not sexy, but extremely lucrative.
What do serial acquirers do?
Both LVMH and Constellation are serial acquirers, although in entirely different industries. Both have the same playbook:
Buy companies with strong fundamentals and long-term potential.
Keep the culture and leadership intact.
Share backend resources to make operations more efficient.
Reinvest profits into more acquisitions.
This is a very specific, very disciplined, difficult model. It’s about letting each business thrive within a larger ecosystem.
In LVMH’s case, that might mean helping Loewe open a flagship store in Seoul. In Constellation’s case, it might mean optimizing pricing for a B2B billing tool in the Netherlands. Different products, same philosophy.
How they play the same game…
Both LVMH and Constellation Software, do a few things almost completely the same:
They let their brands run the show.
Execution is decentralized. Whether it’s Louis Vuitton or a tax software company in Germany, each brand keeps its leadership, culture, and creative direction. But behind the scenes, is a central backbone that helps with capital, strategy, and systems. LVMH and Constellation support when needed.
They’re founder-friendly.
These companies are magnets for founders who want to sell without selling out. You don’t hand over your life’s work to a bureaucratic machine, you join a group that actually protects your identity and helps you grow it. They buy great (founder-led) businesses, but founders also come to them. This is a massive benefit and advantage for serial acquirers.
They’re built to absorb shocks.
If one brand/subsidiary struggles, the machine keeps going. There’s no single point of failure. With dozens (or hundreds) of revenue streams, their diversification is what makes them resilient through economic cycles, changing tastes, and competitive threats.
Capital allocation is the real product.
Neither LVMH nor Constellation is just selling handbags or software, they’re in the business of capital deployment. That’s the actual skill. Both use free cash flow to reinvest (hopefully intelligently): into acquisitions, brand-building, infrastructure, or share buybacks (to a limited extent). They’re always thinking of opportunity cost, and hurdle rate.
Other than the four we have already mentioned, there are a few other similarities that are worth noting.
Both companies make long-term investments in things that take years, sometimes decades, to pay off. In LVMH's case, it’s brand equity and heritage. In Constellation’s case, it’s the lifetime value of sticky enterprise software contracts.
This is huge. Most conglomerates scale by forcing integration, one ERP, one HR system, one logo. LVMH and Constellation do the opposite. They scale through autonomy, trusting each business to operate its best without meddling from HQ. It's anti-corporate. (Although some things, for obvious reasons, do get centralized, depending on the type of company.)
Both companies have a great strategy, but it all comes down to something intangible; culture. Both firms have a deeply embedded operating philosophy that gets passed down internally. New employees and acquired businesses are expected to absorb the culture.
This point really can't be overstated. LVMH has shown it's willing to walk away from overpriced deals. Remember how they tried to renegotiate the Tiffany acquisition during the pandemic? Constellation does the same, with strict internal return hurdles it won’t compromise on. In a market where FOMO often drives M&A decisions, both companies are a case study in price discipline. That said, the nearly €16 billion price tag for Tiffany & Co. still needs to prove it wasn’t a case of overreach. The jury’s still out on that one.
Lastly, LVMH sells emotion. Constellation sells utility. Yet, both rely on a mix of art and science to steer their decisions. The art being intuition, brand, taste, and people; the science being cash flow, ROIIC, and data. It’s not just about numbers, and it’s not just gut instinct. What sets them apart is their ability to read both the hard stuff (the financials) and the soft stuff (the story, future, brand) behind the business. And they know that long-term success lives at the intersection of the two.
Closing thoughts
At first glance, LVMH and Constellation Software couldn’t be more different. One sells champagne and leather. The other, billing software and municipal databases. But dig a little deeper, and you see the same foundation.
Both companies focus on buying good businesses, leaving them alone to do what they do best, and stepping in only when necessary. Neither LVMH nor Constellation depends on one product, one brand, or one market. That makes them durable. That matters more than ever in a world that’s constantly shifting.
As investors, we’re always on the hunt for companies that think in decades. They're not perfect. They make mistakes. But they’ve built operating systems that give them the time and structure to learn from them without falling apart.
And that’s the kind of business we like to own.
Have a wonderful day and happy investing.
The Dutch Investors