For any business enjoying a period of strong financial performance, expanding its portfolio through acquisitions is an attractive prospect. Whether the growth comes from taking over rival companies, increasing its geographies or expanding its offer of products by adding on complementary businesses, the synergy that comes from an acquisition provides great scope for improvement and new opportunities altogether.
There is no doubt that such an approach reaps positive results, so much so that some businesses often make acquisitions the focal point of their growth strategy.
Bunzl is just one such example. Since 2004, this distribution giant has made 151 acquisitions and added an average annual revenue of £287 million through an annual average spend of £224 million.
Despite the takeover spree, it appears that Bunzl is a master of moving from strength to strength. In 2016, the company reported a share price increase of nearly 20 per cent, whilst sales for the period between July and September rose by 7 per cent. Most significantly, and in spite of the sizeable spend on the acquisitions itself, its return on invested capital reached 17 per cent.
Evidently, the acquisition strategy works, but how does Bunzl make such a success of it? After looking at the company’s half-year presentation and insights, it was clear how the company chooses its acquisition targets, and how it integrated them for growth.
The 2016 deals
A ‘disciplined approach to acquisitions’Although it appears Bunzl has an incredible active acquisition policy, the company is equipped with strict and extremely clear parameters for selecting its takeover targets. Perhaps the reason for this, it may be surprising to know, is that Bunzl pays for all its acquisitions from its cash flow.
So, what’s the secret to Bunzl’s success?A clearly defined strategy, no doubt.
Turnover of £1.8 million, with an adjusted EBITDA of £116k. Predominately operates in the commercial marketplace. The comprehensive product range includes telescopic and sliding door operators, and is complemented by an aftercare service. Works to an...
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