A Hunting Ground for Potential Buffett Acquisitions

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A Hunting Ground for Potential Buffett Acquisitions

Warren Buffett’s annual shareholder letter for Berkshire Hathaway was released on February 28. Each year, investors far and wide comb the letter for its insights and wisdom, and this year is no exception. There is one passage that—more than any other—reveals how Buffett thinks about attractive investment options: his list detailing requirements for acquisitions. It is excerpted below:

Berkshire Hathaway Inc. Acquisition Criteria

We are eager to hear from principals or their representatives about businesses that meet all of the following criteria:

1) Large purchases (at least $75 million of pre-tax earnings unless the business will fit into one of our existing units),

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2) Demonstrated consistent earning power (future projections are of no interest to us, nor are “turnaround” situations),

3) Businesses earning good return on equity while employing little or no debt,

[drizzle]

4) Management in place (we can’t supply it),

5) Simple businesses (if there’s lots of technology, we won’t understand it),

6) An offering price (we don’t want to