Buffett: Don’t ask the barber whether you need a haircut

Warren Buffett’s annual letter to shareholders is always fun. Since we’ve got a small BRK position in the Decade of Daddy Mirror Fund, I thought I’d share with you an interesting idea he has for Boards of Directors to consider when their own company’s shares are being offered to satisfy part of an acquisition in an M&A deal:

When stock is the currency being contemplated in an acquisition and when directors are hearing from an advisor, it appears to me that there is only one way to get a rational and balanced discussion.

Directors should hire a second advisor to make the case against the proposed acquisition, with its fee contingent on the deal not going through. Absent this drastic remedy, our recommendation in respect to the use of advisors remains: “Don’t ask the barber whether you need a haircut.”

Neat idea. Can you imagine what it would do to the M&A industry?

MRM