Sunday, December 11, 2005

Acquisition Criteria

We look for people who have a passion for their business. We frequently buy businesses the owners still manage, where they are monetizing a lifetime of work. They often don't want to sell but need to for estate planning or other reasons.

They need to have a passion because we don't have any employment contracts - because we don't think they work - we don't stand over them with whips, and they're already rich. We just try not to kill or dampen their love for their business.

We also look for three things: intelligence, energy and integrity. If you don't have the latter, then you should hope they don't have the first two either. If someone doesn't have integrity,
then you want them to be dumb and lazy. (Laughter)

We look them in the eyes and ask, ¡°Do they love the business or the money?¡± If someone wants to cash out, then we have a problem because we only have 16 people at Berkshire's headquarters and can't run it ourselves.

Munger: The interesting thing is how well it [our acquisition strategy/process] has worked over a great many decades, and how few people copy it. (Laughter)

Excerpt from "2005 Berkshire Hathaway Annual Meeting"

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