Lumine Group is a strategic acquirer and developer of Vertical Market Software (VMS) businesses serving the Communications and Media industries. Originally a vertical within Constellation Software’s Volaris Operating Group, Lumine was branded in 2020 and spun out as a standalone entity in 2023. The company operates a high-quality, perpetual-ownership platform in two mission-critical markets characterised by high switching costs and low churn. Its model combines disciplined capital allocation, a decentralised structure, and a ‘buy-and-hold-forever’ philosophy- creating a durable compounding engine focused on niche segments and complex carve-outs where competition is limited.
The Nyland Operating System
Founder and CEO David Nyland was one of Constellation’s most effective capital allocators, consistently delivering returns well above its industry-leading average of 25%. Over the last decade, Nyland has institutionalised a global and scalable acquisition framework (adapted from the CSU playbook) that balances business unit autonomy with accountability, driving high founder retention and strong inbound deal flow. His disciplined, long-term approach prioritises intrinsic value over short-term optics, reinforcing Lumine’s reputation as a preferred acquirer.
Large Addressable Market and Acquisition Runway
Lumine operates in the communications and media industries, with a combined $60bn M&A opportunity. The CEO reports a pipeline in the low thousands of targets, with active discussions in the hundreds. Current ownership of 33 businesses underscores significant future growth potential. As long-term investors, Lumine focuses on acquiring businesses with enduring growth potential, strengthening core profitability and making strategic investments to position them for sustained success.
Resilient Business Model
Lumine derives 73% of its revenue from recurring sources, up from 57% in 2020, reflecting a disciplined M&A strategy focused on mission-critical, subscription-based models. Post-acquisition, the ‘Lumine playbook’ enhances economics, prioritising recurring revenues and cash conversion, increasing reinvestment capacity. Combined with minimal leverage (<2× EBITDA) and robust margins (projected EBIT of 34.5% in 2025), the company maintains a durable and scalable model built for long-term growth.
Lumine’s Growth Engine: Disciplined M&A in a Vast Market
Source: Lumine filings, RBC, Ziller estimates1
Return Hurdles as Culture
Lumine applies a strict acquisition framework, purchasing businesses at 1–2× sales and 4–8× EBITDA, well below listed software peers. This approach delivers immediate 10–25% unlevered cash-on-cash returns, supported by a decade-long track record of strong performance. By avoiding reliance on financial engineering or multiple expansion, Lumine reinforces long-term value creation. The majority of the 33 acquisitions to date have met or exceeded >20% IRR hurdles. Furthermore, its reputation for respectful stewardship attracts sellers seeking continuity, helping to preserve key customer relationships.
Valuation & Return Profile
Lumine offers the highest forward revenue CAGR (>30%) among peers, minimal gearing, and a terminal PEG of 0.8×, supporting a >20% estimated total rate of return.
Disclaimer: Please note that these are the views of the writer and not necessarily the views of Ziller. This article does not take into account your investment objectives, particular needs or financial situation. Some small changes were made to this article, based on updated information.