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At the 2018 Berkshire Hathaway Meeting a shareholder asked about the advantages the company has when it comes to attracting more business owners to sell to the Group. He suggested the trust in Berkshire and the prestige of doing a deal with Buffett and Munger might allow them to gain a “hometown discount” when buying. The answers are instructive in a number of ways, including Berkshire non-aggressive stance contrasting with other acquirers.
A good home
Buffett said he thought Berkshire a very good home for companies “for somebody that cares about a business that they and their parents and maybe their grandparents lovingly built over decades – if they care about where that business ends up being after, for one reason or another, they don’t want to keep it or can’t keep it in the family, we absolutely are the first call.”
Oh well, I suppose you’ll have to do..
Buffett told a story of the business owner who hated the idea of selling to conventional buyers:
“There was one fellow who came to me many years ago. And he had a wonderful business. And he had been worried because he had seen a friend of his die. And the problems that arose later when the managers, to some extent, tried to take advantage of the widow. And it became a disaster.
So he said he thought about it a lot the previous year. And he decided he didn’t want to sell the business to a competitor, who would be a logical buyer, because they would fire all of his people. And the CFO that would remain, and, you know, all up and down the line, they’d all be the acquirer’s people. He didn’t want to do that to his people.
And then he thought, and he didn’t want to sell it to a private equity firm, because he thought they’d leverage it up. He never liked to leverage that much, and then they’d just resell it later on to somebody, so it would be totally out of control of what he wanted to do.
And he wanted to keep running it himself. So he said, “Warren,” he said, “It isn’t that you’re such a great guy,” he says, “It’s you’re the only one left.” So Berkshire will continue to
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