Referring to the CEO of Constellation:  "In his May letter to Constellation shareholders, Mr. Leonard laid out the company’s track record when it comes to return on invested capital. Over the past 11 years, it has averaged almost 21 per cent. In recent years, it has been better, peaking at 36 per cent last year. ROIC is a bit of a mind-bender, but put overly simply, that means that for every dollar of capital that Constellation had invested in 2011, the company generated 36 cents for shareholders.

What’s more, nowhere on Mr. Leonard’s résumé is a huge deal gone wrong. There’s nothing like Kinross Gold Corp.’s purchase of Red Back Mining Inc., or Hewlett-Packard’s acquisition of Autonomy Corp.

The result is Constellation has been a stellar performer on the stock market. An investor who bought when Constellation went public in 2006 would have booked a total return of 375 per cent, which works out to about 32 per cent a year.

How does Mr. Leonard do it?

He has focused on buying small companies that other acquirers couldn’t even really be bothered to pick up. Constellation has built a network of small firms that may one day want to be bought, and so can source its own transactions. The result is there is rarely competition for the deal, or investment bankers looking to run up the price to maximize their commission. A side benefit of doing lots of tiny transactions is that even if Mr. Leonard did blow a deal here and there, it would hardly matter.

Mr. Leonard has also set up his firm so the incentives for those doing deals are tied very strongly to how those deals work out, linking pay to return on invested capital rather than simple growth in earnings or revenue. What matters is what Constellation pays for that growth."