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Berkshire Beyond BuffettThe Enduring Value of Values$
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Lawrence Cunningham

Print publication date: 2014

Print ISBN-13: 9780231170048

Published to Columbia Scholarship Online: November 2015

DOI: 10.7312/columbia/9780231170048.001.0001

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(p.9) 1 Origins
Berkshire Beyond Buffett

Lawrence A. Cunningham

Columbia University Press

This chapter describes the beginning of Warren Buffet’s relationship with Berkshire Hathaway. In 1956, twenty-six-year-old Buffett formed the investment firm Buffett Partnership Ltd., which later acquired Berkshire Hathaway, Inc. in 1965. At the time of its acquisition, Berkshire Hathaway was a New England textile manufacturer. The local press portrayed Buffett’s acquisition of Berkshire Hathaway as a hostile bid, stoking rumors that he was a takeover artist prepared to hasten the liquidation of the struggling company. Buffett recoiled at having a reputation as a liquidator and took pains to avoid acting like one. Yet Berkshire’s textile operations continued to decline for years as the forces of globalization hammered the industry. It was forced to curtail gradually operations through the 1970s, with Buffett finally shuttering the mills for good in 1985. Buffett’s acquisition of Berkshire was a great learning experience for him—learning what not to do. From then on, he made it Berkshire policy never to engage in hostile takeovers and vowed never to liquidate an acquired subsidiary. As a rule, Berkshire would acquire only companies with top management in place, to avoid having to arrange managerial shuffles. Above all, Berkshire would seek businesses with long-term economic value and willingly pay a fair price for them. The remainder of the chapter details Berkshire’s acquisitions from the 1960s through the 1980s.

Keywords:   Warren Buffett, Buffett Partnership Ltd, Berkshire Hathaway Inc, acquisitions

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