In this article, we continue our discussion regarding founder-led businesses, but this time, we look at the international market. Public companies run by founders are recognized more as an American phenomenon. According to a study by Schroders (LSE:SDR, Financial) in 2017, approximately 70% of the world's $500 million-plus founder-led companies were listed in the U.S. While entrepreneurial equities may seem to be a rare species overseas, we have had the fortune to encounter a few of them in our investable universe. Although these businesses operate in different domains and regions, their commonality is apparent – a track record of superior returns on capital and growth in shareholder value, as well as significant insider ownership.
Technology One (ASX:TNE, Financial)
Australia-based Technology One is an enterprise software supplier of comprehensive integrated solutions to the government, financial services, health and community services, education and utility sectors. The company was founded in 1987 by Adrian Di Marco, who saw the opportunity to build financial software for businesses and governments. At the time, banks would not support this pioneering startup, which was determined to take on global software giants. Di Marco turned to his friends for funding. With a small amount of capital, he started to build Australia's largest enterprise software provider in a demountable office in the car park of a hidden factory in the industrial suburbs of Brisbane. Today, Di Marco is chairman and Chief Innovation Officer of the company with over 7% ownership.
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Nihon M&A Center (TSE:2127, Financial)
Japan-based Nihon M&A Center is the country's largest independent merger and acquisition platform, supporting small and medium-sized enterprises both domestically and overseas. The company was founded in 1991 by two computer salesmen, Yasuhiro Wakebayashi and Suguru Miyake, leveraging their nationwide network with accounting firms and financial institutions. Since then, Nihon M&A Center has supported over 5,000 friendly merger and acquisition transactions. Today, the two founders together own over 12% of the company.
Israel-based Check Point Software Technologies is one of the global leaders in technology solutions for protecting corporate enterprises and governments from cyberattacks. The company was founded by Israeli software engineer Gil Shwed, who is considered the inventor of the modern firewall. Today Shwed remains as CEO of the company, owning roughly 17% of total shares outstanding. Co-founder and Chairman Marius Nacht owns approximately 4%. According to the company’s annual report, Shwed requested to forego his salary and bonus for the past several years.
Craneware (LSE:CRW, Financial)
Scotland-based Craneware is a software provider of automated value cycle solutions for U.S. hospitals to improve margins and enhance patient outcomes. The company was founded by CEO Keith Neilson and Gordon Graig in 1999, the same year they signed up their first customer. By the end of the next year, the total customer base amounted to over 20, and today, the company serves more than one-third of all registered hospitals in the U.S. Neilson and Craig own nearly 12.7% and 8.9% of the total shares, respectively, as of the latest filing.
Bioventix (LSE:BVXP, Financial)
UK-based Bioventix creates and supplies high-affinity monoclonal antibodies for use in blood-testing machines that are used in hospitals and other labs around the world. The company was formed as the result of the management buyout led by the current CEO, Peter Harrison, back in 2003. Harrison has worked in the field of development and commercialization of antibody technologies since 1986. Today, he owns over 8% of the company.
Disclosure: The mention of any security in this article does not constitute an investment recommendation. Investors should always conduct careful analysis themselves or consult with their investment advisors before acting in the financial market. We own shares of Technology One, Nihon M&A Center, Check Point, Bioventix, and Craneware.
Read more here:
- The Urbem Quality Score
- The Founder Advantage
- Hargreaves Lansdown: Mid-Term Tailwinds but Long-Term Uncertainties
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