Berkshire Hathaway Letters to Shareholders: 1965-2024

by Warren Buffett

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 $75 million of pre-tax earnings unless the business will fit into one of our existing units), 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 no debt, Management in place (we can’t supply it), Simple businesses (if there’s lots of technology, we won’t understand it), An offering price (we don’t want to waste our time or that of the seller by talking, even preliminarily, about a transaction when price is unknown). The larger the company, the greater will be our interest: We would like to make an acquisition in the $5-20 billion range. We are not interested, however, in receiving suggestions about purchases we might make in the general stock market. We will not engage in unfriendly takeovers. We can promise complete confidentiality and a very fast answer — customarily within five minutes — as to whether we’re interested. We prefer to buy for cash, but will consider issuing stock when we receive as much in intrinsic business value as we give. We don’t participate in auctions. Charlie and I frequently get approached about acquisitions that don’t come close to meeting our tests: We’ve found that if you advertise an interest in buying collies, a lot of people will call hoping to ...