How to Close a Deal Like Warren Buffett: Lessons from the World's Greatest Dealmaker

LESSON 2

Go Big

WARREN BUFFETT is not afraid to go big. Back in 1986, he acquired the Scott Fetzer Company, a collection of 22 separate businesses. Scott Fetzer produced everything from Ginsu knives and the World Book encyclopedia to Kirby vacuum cleaners and Scot Laboratories’ cleaning products. The deal was one of Warren’s largest up to that point, and it has well exceeded his high expectations.

“We paid $315.2 million for Scott Fetzer, which at the time had $172.6 million of book value,” Warren wrote in his 1994 letter to Berkshire shareholders. “The $142.6 million premium we handed over indicated our belief that the company’s intrinsic value was close to double its book value.”

In 1974, Ralph Schey, a Harvard Business School graduate, had ...