From Warren Buffett’s 2018 letter to Berkshire shareholders: In our search for new stand-alone businesses, the key qualities we seek are durable competitive strengths; able and high-grade management; good returns on the net tangible assets required to operate the business; opportunities for internal growth at attractive returns; and finally, a sensible purchase price. That last requirement proved a barrier to virtually all deals we reviewed in 2017, as prices for decent, but far from spectacular, businesses hit an all-time high. In part, it’s because the CEO job self-selects for "can-do" types. If Wall Street analysts or board members urge that brand of CEO to consider acquisitions, it’s a bit like telling your teenager to be sure to have a normal sex life. Despite our recent drought of acquisitions, Charlie [Munger] and I believe Berkshire will have opportunities to make very large purchases. In the meantime, we will stick with our simple guideline: the less the prudence with which...
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