Begin by heating your Dutch oven or heavy-bottomed pot over medium heat. Add diced bacon and cook slowly until crispy and golden, about 8-10 minutes. Remove bacon with a slotted spoon and set aside, leaving the bacon fat in the pot.

Pat beef cubes completely dry and season generously with salt and pepper. Working in batches to avoid crowding, brown beef pieces in the bacon fat over medium-high heat for about 12-15 minutes total.

Remove beef and add sliced onions and carrots to the same pot. Cook until softened and lightly caramelized, about 8 minutes. Add tomato paste and garlic, stirring constantly for another minute until fragrant.

Sprinkle flour over vegetables and cook, stirring, for 2 minutes to eliminate raw flour taste.

Pour wine slowly into the pot, scraping up browned bits from the bottom. Add beef broth, herbs, and return the browned beef and bacon. The liquid should just barely cover the meat.

Bring mixture to a gentle simmer, then cover and transfer to a 325°F oven. Braise for 2 to 2½ hours, checking occasionally and adding liquid if needed.

During the final hour of braising, sauté pearl onions in butter until golden and tender, about 15 minutes. Cook mushrooms until golden brown and their moisture has evaporated, about 10 minutes.

Remove bay leaves and herb stems, then gently fold in the sautéed onions and mushrooms. Let the bourguignon rest for 10 minutes before serving.