Bunzl (BNZL) Investor Update summary

Acquisition strategy and growth

• Over 230 acquisitions since 2004, with GBP 6 billion committed spend, driving two-thirds of group revenue growth and an average of 15 deals per year in recent years.

• Focus on large, fragmented markets and strong cash generation, leveraging a compounding model for investment and growth.

• Expansion in higher-margin sectors, such as safety, and value-added distribution businesses, increasing value-added services and own-brand leverage.

• Significant growth potential remains in existing and new markets, with over 1,300 potential targets identified and opportunity to double size in high-potential end markets.

• Acquisitions are self-funded, with average annual committed spend of £550m for 2021-2024.

Deal origination, execution, and integration

• 75% of deals originate from internal contacts, with local management building long-term relationships and strong local-central team partnership.

• Central Corporate Development team partners with local managers for disciplined execution, strict due diligence, and robust transaction documentation.

• Rigorous filtering process, with high attrition rates, ensures only well-fitting businesses are acquired.

• All deals require executive committee or board approval, with regular post-acquisition reviews and oversight.

• Onboarding focuses on rapid financial reporting, realizing purchasing and freight synergies, and optimizing working capital.

Valuation, returns, and deal structure

• Average acquisition multiple for bolt-on deals is 8x, with ROIC of 12%-13%; group ROIC averaged 15% from 2019-2025, well above pre-tax WACC.

• Project WACC is used as a benchmark, with most deals surpassing it in the first year or within two to three years.

• Deferred and contingent consideration structures and minority retention by management sellers align interests and incentivize long-term performance.

• EV/EBITA multiples on initial stakes have remained broadly stable over the past decade.