> Warren Buffett Blog: It takes minutes for Buffett to make a billion dollar deal

Thursday, November 3, 2016

It takes minutes for Buffett to make a billion dollar deal

"When somebody calls, I can usually tell within two or three minutes whether a deal is likely to happen or not. There’s just half-a-dozen filters. And it either makes through the filters or not."

One of these unsolicited pitches came from Eitan Wertheimer, chairman of Israeli metalworking company Iscar, back in October 2005. Wertheimer’s proposal came in the form of a letter, and although it was just one and a quarter pages long, it was enough to pique Buffett’s interest. Iscar’s management team visited Omaha a month later.

Buffett decided to buy 80% of Iscar for about $5 billion in May 2006. Berkshire later bought the rest of the company for $2 billion in 2013.

Berkshire Hathaway also decided on its largest acquisition with the same speed. The company agreed to buy Precision Castparts in a $37.2 billion in Aug. 2015.

When asked if Buffett he had spent a year studying the company given the cost of the deal, and Buffett responded with “No.” Buffett said that he met Precision’s CEO, Mark Donegan, just a month before the deal was announced, heard him talk for 30 minutes, liked him, and decided that he was interested in offering a bid.