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  • Dave

Buying a Company Like Warren Buffet Does

A friend recently shared an article with me by Andrew Wilkinson: about simplifying the acquisition process. Wilkinson made the interesting point that Warren Buffet does not follow the standard M&A practice of spending years and a fortune on due diligence before buying a company. Buffet makes it simple and efficient. Successful business owners can be bombarded with buyout offers. Most such proposals require the business owner to spend an inordinate amount of time and money on lawyers, accountants and investment bankers. Quite often the deal can fall apart based on minutiae. A better approach is the Buffet Way. Do enough due diligence to confirm that a company's financials are accurate not perfect. Make sure you understand the business and can trust the owners. Confirm that there aren't any legal ticking time bombs. That is enough to know if you want to do the deal or not. Make a fair offer. Move on quickly if a deal can't be reached. If more people bought companies the way Buffet does, the whole process would be a lot more painless for the buyer and seller.

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