Trust is always important, especially in the workplace. But for Warren Buffett and the executors who run Berkshire Hathaway’s 62 branches, trust is more than just important. It is essential.
That’s probably why Buffett seems confident that his latest acquisition, his largest in almost seven years, will be successful. On Monday, billionaire investor Berkshire Hathaway’s holding company announced a planned $ 11.6 billion acquisition of insurance company Alleghany – led by CEO Joseph Brandon, a man who described Buffett as a “longtime friend”.
Their relationship dates back at least two decades: From 2001 to 2008, Brandon served as President and CEO of Insurer General Re, owned by Berkshire. That is, Brandon had previously worked for Buffett, and he clearly deserved Oraha’s trust from Omaha.
“I’m particularly pleased to be working with my longtime friend, Joe Brandon, once again,” Buffett said in a statement announcing the deal, adding: “Berkshire will be the perfect permanent home for Alleghany, a company which I have observed for 60 years. “
Founded in 1929, Alleghany – which reported $ 12 billion in total 2021 revenue – now joins a Berkshire portfolio of insurance brands that includes General Re and GEICO. For Buffett, the deal makes sense on several levels: he could add yet another insurance brand to Berkshire’s holdings, and he could feel comfortable spending billions of dollars on a company run by someone he knows and trusts.
Buffett is known for taking a practical approach to running companies he owns through Berkshire. The New York Times described the billionaire as a “delegate in chief,” while longtime friend and business partner Charlie Munger described Buffett’s 2017 style of management as a “delegation short of dismissal.”
In other words, Buffett likes to give his managers the freedom to run their businesses as they see fit. Through non-micro-management, Buffett said at the 2017 Berkshire Annual General Meeting, “we can free up managers … so that they can spend all their time figuring out the best way to run their business.”
When it comes to trust, Buffett has said in the past that the quality of a company’s management is a major investment factor for him. And when deciding with whom he wants to do business, he has made it clear that he values integrity above all else.
In 1998, speaking with a group of University of Florida MBA students, Buffett outlined three key criteria for assessing a potential employee: integrity, intelligence, and energy. Integrity is the most important of the three characteristics, he said, because you can not trust anyone who lacks it, no matter how much intelligence and energy they have.
It is also the most difficult of the three characters to find in the business world, he said. “Every business student you have has the intelligence and energy you need,” Buffett told a University of Nebraska alumni magazine in 2001. “Integrity is not tied to your DNA.”
Sign up now: Get smarter about your money and career with our weekly newsletter
Do not miss:
What you need to know about Greg Abel – Warren Buffett’s successor to Berkshire Hathaway
Warren Buffett and Charlie Munger: “We made a lot of money” but here is “what we really wanted”
Add Comment