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Just trying to think through, “if it is so obvious, why isn’t everybody doing it?”
There is more to BH than how they acquire companies. They also have a track recored of out performing S&P for decades. I doubt if BH alpha is because of their streamlined acquisition process. Does Tiny have a similar record?
Earlier quoted context omitted.
Exceptions to the rule. Precision Castparts, Burlington Northern, Clayton Homes, Duracell, Pacificorp, Lubrizol, Acme Brick, Dairy Queen, Pilot Flying J, all were bought as healthy companies.
> Clayton Homes TBD per John Oliver: https://www.youtube.com/watch?v=jCC8fPQOaxU
There is more to BH than how they acquire companies. They also have a track recored of out performing S&P for decades. I doubt if BH alpha is because of their streamlined acquisition process. Does Tiny have a similar record?
I figure that any acquirer who wants to go this route needs to basically be ready to pay in cash? Tying to finance a deal through debt (LBO or otherwise) would mean that you need to be prepared to do precisely the sort of DD bemoaned here? Just trying to think through, “if it is so obvious, why isn’t everybody doing it?”
Its not exactly the serengeti of diversity required to build a berkshire zoo. Software is just bits.
Hardware and the pipes are a different story. There you can build a zoo.
But, there sure are a lot of fools parting with their money.
Earlier quoted context omitted.
+1. Warren and charlie also say that they would rather buy good businesses at fair price than fair businesses (or cash strapped ones or ones about to go bankrupt. I know thats not what fair means) at good price.
There’s also the consideration that a good, healthy business doesn’t want to be bought. The opportunity only presents itself if you are willing to massively overpay or if a good business runs into financial issues. I worked for a Berkshire subsidiary before jumping into tech. First hand, it is zero bullshit that they invest in good management teams and let them run the business. The best run company I’ve ever worked…
There is more to BH than how they acquire companies. They also have a track recored of out performing S&P for decades. I doubt if BH alpha is because of their streamlined acquisition process. Does Tiny have a similar record?
Earlier quoted context omitted.
> Clayton Homes TBD per John Oliver: https://www.youtube.com/watch?v=jCC8fPQOaxU
John Oliver doesn't approve of certain aspects in their business model, but when Clayton was acquired in 2003, it was a healthy company and has grown massively since.
The typical process requires due diligence because there is no trust - there are a huge amount of dodgy businesses, sketchy owners and smooth talkers trying to extract cash from investors.
This model might work for a few years but inevitably requires moving further out of the trust network where deeper and further due diligence is required. Or, its not done and every deal will get worse quality and expose them to more risk.