The term we sometimes see used for the Merkel's, Leucadia's, Brookfield's, etc, etc. At an event
awhile back where there were a handful of private fund guys who have zeroed in on a Buffett specialty, and using the formula in developing a strong but not well publicized niche - buying privately held companies from founders looking for exit, holding and not flipping them, and letting them maintain their autonomy. Same types of Buffett criteria, on the scale that Buffett was at a few decades ago. One had a roughly a $100million volume minimum or something, but it depended on the company.
These were large but low-profile private pools (no new partners, thank you). Fairly secretive, even. But it all was a familiar theme to any BRK shareholder. We all know the value theme - the business valuation world generally assigns lower multiples to private companies (discounts for marketability and/or liquidity, as they say).
Now I digress:
One guy's firm had an interesting, attention-getting incentive - a new S-Class Mercedes, for an appropriate introduction. He says they typically end up giving one every month or so. My first thought was that this was strange. No choice, no decision. Why an S-Class? Wouldn't any accountant, attorney, or other adviser always prefer the money? (Wouldn't I?) Then I thought about it.
A dollar 'reward' would be arbitrary, and as likely as not to cause some dissatisfaction when people thought about it ('less than 1% of the transaction?!"). Further it caught the imagination better than a dollar figure. While you may be a committed Honda owner, it would be easy to rationalize to the wife, parents, or associates ('they gave it to me!'), and not something you'd just give back. Plus it would remind you of the provider every day, and be sort of an advertisement to anyone who you're normally conducting business with. And perhaps the most compelling rationalization - for professionals who might be normally expected to share fees in some manner with their firm's other members (or their boss) - is that a car is just a car. Anyway, it made an impression that sticks, even with the passage of some time. I wouldn't buy an S-Class -- the LS has been the smarter choice for me -- but if someone gave me one....
Anyway - back to the original point - there are a number of firms actively employing Buffett's private-business-acquisition model now. Same criteria (except BRK's current size criteria); same promises. If I can find those business cards I'll maybe name some names.
awhile back where there were a handful of private fund guys who have zeroed in on a Buffett specialty, and using the formula in developing a strong but not well publicized niche - buying privately held companies from founders looking for exit, holding and not flipping them, and letting them maintain their autonomy. Same types of Buffett criteria, on the scale that Buffett was at a few decades ago. One had a roughly a $100million volume minimum or something, but it depended on the company.
These were large but low-profile private pools (no new partners, thank you). Fairly secretive, even. But it all was a familiar theme to any BRK shareholder. We all know the value theme - the business valuation world generally assigns lower multiples to private companies (discounts for marketability and/or liquidity, as they say).
Now I digress:
One guy's firm had an interesting, attention-getting incentive - a new S-Class Mercedes, for an appropriate introduction. He says they typically end up giving one every month or so. My first thought was that this was strange. No choice, no decision. Why an S-Class? Wouldn't any accountant, attorney, or other adviser always prefer the money? (Wouldn't I?) Then I thought about it.
A dollar 'reward' would be arbitrary, and as likely as not to cause some dissatisfaction when people thought about it ('less than 1% of the transaction?!"). Further it caught the imagination better than a dollar figure. While you may be a committed Honda owner, it would be easy to rationalize to the wife, parents, or associates ('they gave it to me!'), and not something you'd just give back. Plus it would remind you of the provider every day, and be sort of an advertisement to anyone who you're normally conducting business with. And perhaps the most compelling rationalization - for professionals who might be normally expected to share fees in some manner with their firm's other members (or their boss) - is that a car is just a car. Anyway, it made an impression that sticks, even with the passage of some time. I wouldn't buy an S-Class -- the LS has been the smarter choice for me -- but if someone gave me one....
Anyway - back to the original point - there are a number of firms actively employing Buffett's private-business-acquisition model now. Same criteria (except BRK's current size criteria); same promises. If I can find those business cards I'll maybe name some names.
