When Berkshire Hathaway does things, it does them simply and sensibly. It wants to buy good businesses, preferring to become 100 percent owners to becoming partial owners just by purchasing stock. So Berkshire has promulgated an advertisement, printed below, seeking sellers. | CCC-Boroson 6 243-282 8 28 01 1 30 PM Page 2 APPENDIX 1 Wanted Cheap Good Companies When Berkshire Hathaway does things it does them simply and sensibly. It wants to buy good businesses preferring to become 100 percent owners to becoming partial owners just by purchasing stock. So Berkshire has promulgated an advertisement printed below seeking sellers. Notable Is Berkshire s Interest in Companies with demonstrated consistent earning power. Pie in the here and now not pie in the sky. Businesses earning good returns on equity. . employing little or no debt. Why not seek perfection Management in place. Changing horses in midstream is especially unwise when those horses have proved their merit. Simple businesses . The less you understand about a business very likely the more nasty surprises lie in store. An offering price. . In bargaining you might try to tie up your opposite number s time. The more of his or her time you waste the more eager he or she may be to arrange some sort of deal any deal. It s better to wind up being paid 5 an hour than nothing an hour. Berkshire doesn t want to fall into this trap and waste a single mo- 243 CCC-Boroson 6 243-282 8 28 01 1 30 PM Page 2 244 WANTED CHEAP GOOD COMPANIES ment of its time. Once Berkshire has obtained an offering price it can just walk away if the seller is asking for too much. If the price is reasonable Berkshire can try to bargain the seller down. In short Berkshire s Help Wanted ad is representative of what Warren Buffett is seeking in any business he invests in something as close to perfection as possible. Almost a sure thing. Berkshire s Acquisition Criteria We are eager to hear from principals or their representatives about businesses that meet all of the following criteria Large purchases at least 50 million of before-tax earnings Demonstrated consistent earning power future projections are of no interest to us nor are turnaround situations Businesses earning good returns on equity while employing little or
