Halma (HLMA) Investor Update summary

M&A strategy and approach

• Focus on acquiring small to medium-sized, privately owned companies in attractive niches with differentiated products and strong growth drivers.

• Emphasis on building relationships with owners, often targeting companies not actively for sale.

• M&A is central to the growth model, aiming to double earnings every five years, with half of growth from acquisitions.

• Decentralized business model grants autonomy to acquired companies, supporting long-term, sustainable growth.

• Investment in dedicated M&A teams and resources at both group and sector levels to support deal sourcing and execution.

Acquisition process and integration

• Divisional CEOs play a pivotal role, spending significant time sourcing and integrating acquisitions.

• The process includes market mapping, deep market research, and leveraging internal and external networks to identify targets.

• Integration is intentionally light-touch, maintaining company autonomy, with support focused on growth enablers like internationalization.

• Financial and compliance controls are standardized, but operational independence is preserved.

• Collaboration and early, ongoing dialogue are key to decision-making and capital allocation.

Deal size, multiples, and performance

• Typical deal sizes range from a few hundred thousand pounds for bolt-ons to up to £150 million for standalones.

• Multiples vary: single-digit EBIT multiples for simpler businesses, low double-digits for high-growth or SaaS companies.

• Recent years have seen a slight increase in multiples for premium businesses, but no significant trend change.

• Most acquisitions perform well over the long term, with volatility higher in the early years and alignment improving over time.

• Cohort analysis and lessons learned from past deals inform ongoing improvements in the acquisition process.