CEO leads with the heart
OpenText has been on a $3 billion US buying spree, and its CEO says it’s not done yet
Canada’s largest software company expects to get even bigger.
Waterloo, Ont.-based Open Text Corp. has spent almost $3 billion US on acquisitions over the past three years, including its recently-closed purchase of Dell EMC’s enterprise content division. It was the company’s largest purchase, at $1.62 US billion, and it made OpenText the world’s largest vendor of software that helps businesses organize and store their documents.
Chief executive Mark Barrenechea said the company’s acquisition spree isn’t over.
Barrenechea said OpenText plans to spend the next couple of quarters focusing on integrating the recently-acquired company into its operations. After that, the hunt for the next target is back on.
“We have not, have not, have not hit the pause button on considering other acquisitions,” Barrenechea said. “Our pipeline continues to be active. We continue to consider acquisitions. I don’t see that slowing down at all.”
This strategy has served OpenText well under Barrenechea’s leadership. Since he became CEO in 2012, the company has more than doubled in value to a market capitalization of $8.67 billion US, posting $1.8 billion US in revenue in 2016.
Barrenechea said he looks for businesses that provide something customers are looking for, but OpenText doesn’t currently offer.
Despite its aggressive growth by acquisitions, Barrenechea described OpenText’s balance sheet structure as “conservative.” He noted OpenText has always maintained or increased its credit rating following acquisitions, with its bonds trading higher following the Dell EMC enterprise content division purchase.
“We are a relatively conservative company. We believe profitable growth is better than just growth,” Barrenechea said. “Any company can grow and lose money. But that’s not us.”
Barrenechea has increased revenue by shifting OpenText’s focus to enterprise cloud services, providing offsite centres where clients can host their data. Revenue from cloud services has grown from zero to $800 million US over the past five years, with Barrenechea predicting it will account for half of the company’s earnings by 2050.
The enterprise cloud computing market is hotly competitive, with companies like Microsoft Corp., Amazon.com Inc. and Google Inc. all offering their own solutions for businesses. Barrenechea said OpenText differentiates itself by owning its own data centres and infrastructure around the world, helping businesses in different countries comply with privacy and security legislation.
For the past two years, Barrenechea has coped with a personal struggle in addition to the challenges of growing a business. He took a step back from his duties to receive treatment last February, saying he is now healthy with a new appreciation for life.
“I’ve learned to lead with my heart, with a great deal of humility and humanity,” he said. “You get a new focus around prioritizing your time around what’s most important.”
With that new perspective, Barrenechea said he is keeping an eye on technological advances in areas like the Internet of things and artificial intelligence. In five years, he said he hopes to be able to say OpenText provided the software working behind the scenes to power companies changing the world.
“I’d like to look back and say, ‘The world transformed for the better and OpenText played a role in that,’” Barrenechea said. “I centre our culture on our customers.” cbrownell@nationalpost.com