Bunzl (BNZL) Investor Update summary

Acquisition strategy and growth model

• Over 230 acquisitions since 2004, with £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, self-funded 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.

• Decentralized model ensures commercial autonomy and agility for acquired businesses, supporting operational improvements and synergies.

• Significant untapped potential remains in existing and new markets, with over 1,300 potential targets identified and active pipelines across countries and sectors.

Deal origination, execution, and integration

• 75% of deals originate from internal contacts, with local management fostering relationships and trust with potential sellers.

• Central Corporate Development and legal teams ensure disciplined execution and robust transaction documentation.

• Rigorous filtering and due diligence processes, with high attrition rates, ensure only well-fitting acquisitions proceed; Exco and board approval required for major deals.

• Multi-year pre-deal relationships and regular post-acquisition reviews are standard.

• Onboarding emphasizes respect for employees and customers, rapid financial reporting improvements, and realization of purchasing and freight synergies.

Valuation, returns, and deal structure

• All deals benchmarked against project WACC, expecting ROIC to meet or exceed WACC by year two or three; most surpass in year one.

• Group ROIC averaged 15% from 2019-2025, well above pre-tax WACC.

• Average acquisition multiple (excluding largest deals) is 8x, with ROIC of 12%-13%.

• Deferred and contingent consideration structures are used to drive post-acquisition performance.

• Increasing use of minority retention for management sellers to align incentives and enhance offer appeal.