Mergers and Acquisitions Summary and Analysis

Buffett compares the exhilarating process he and Charlie follow to acquire a business like looking for a spouse. They are active, interested, and open-minded but unhurried. Buffett retells the princess that kissed a frog fairy tale and remembers younger days kissing toads that croak. A golf pro tells him "practice makes permanent," so he changes from buying fair business at good prices to buying good business at fair prices. Buffett and Munger consider buying 100% ownership or marketable securities representing partial ownership, but any new investment must use large amounts of capital. Their goal maximizes real economic benefits, not number of enterprises. Two business categories are of major interest. The first is firms adapted to inflationary times that can readily increase prices and scale up to larger volume with minimal new capital infusion. The second is firms that...