I'd be interested in knowing which of the companies he sold were from "motivated sellers". But in the meantime: distressed shareholders are not the same thing as a distressed business. Also: every business is capitalization-troubled compared to BRK. :)
There are more, but this is enough to show a bit of a pattern.
And you do have a good point about distressed shareholders vs distressed businesses. But either one can drop the sell price (aka, make them undervalued).
After that quote I actually re-read the section in the Snowball where they talk about Mrs. Blumkin (Furniture Mart).
1) The business wasn't distressed and was doing great.
2) Mrs. B was growing old and her son Louie had taken over most of the work, she was still active in managing the carpet section
3) They were looking at a German company to take them over; their offer was $90.0 mn
4) Buffet told them they would get a higher valuation if they waited and then laid out the pros and cons of Berkshire being in charge. Also pointed out that many other firms would have managers which would inevitably try and run the show.
5) BRK wanted them on as partners to run the firm, without bringing someone in from the outside, which is something both Louie and MRs. B wanted. She didn't want to sell to a German company, being a Russian immigrant.
5.1) T His is generally BRK policy, it invests in strong, track record proven companies and teams, after doing massive amounts of diligence on them.
6) She then told him she wanted $55.0 mn in cash, for 90.0% of the company.
7) Buffet signed, with the caveat that if she wanted to change the deal she could. She said no.
8) Her son and his grandson stayed on and helped grow the business.
9) At some point Mrs. B got very irritated with her growing lack of control, and when her son/grandsons overruled her on a carpet purchase decision she got mad and left.
10) She started her own business opposite the road and began to beat Furniture mart. Since Buffet did not take sides she was quite hurt and betrayed.
11) BRK pays her $5.0 mn for the name of her new mart, makes sure shes happy and in charge of furniture mart, and ensures her non compete clause is bullet proof.
Its an interesting story to read about, as is Mrs. B - she also had a laser focus on her expertise; she didn't care to go beyond it, and was extremely effective within it. She also made decisions quickly and never looked back.
Funnily, 20% of the stake was held by her daughters, and her sons-in-law came to sign the deal. They were aware they would get more if they signed with the Germans but Mrs. B basically harangued them into submission - "how much do you want, I'll pay ya".
Her management style was... interesting - Buffet had been told that she wanted to sell the place 20 years earlier. When he got there to sign the deal, Mrs B. had part of her office (may have been sons/in laws) lined up, just so that she could yell at them and call them a bunch of bums. Once she abused them enough, Buffet was allowed to walk away.
