On investors being liked by the management

Buffett and Munger make it a policy to avoid a sense of hostility with the managers of companies they buy into.  A few months ago a bid by Kraft Heinz, which Berkshire Hathaway controls together with 3G, for Unilever was withdrawn because Buffett felt that the managers of Unilever did not want it to go ahead.

This attitude is unusual in the “market for managerial control”.  More often, the managers of acquirers pay little attention to the receptiveness of the managers of the acquiree companies. After all, in their arrogance, they think that their team will be dominant thereafter, their culture will be imposed and many of the acquiree’s managers will be dismissed.

In Buffett and Munger’s minds there are some very sound reasons for retaining the expertise and goodwill of those who are taken over.

Buffett said at the last Berkshire AGM: “We will not make hostile tenders ourselves. I do not believe that there’s anything fundamentally wrong with the idea. I mean, if you take the Fortune 500 companies, I’m sure that all 500 are….

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