I figure that any acquirer who wants to go this route needs to basically be ready to pay in cash? Tying to finance a deal through debt (LBO or otherwise) would mean that you need to be prepared to do precisely the sort of DD bemoaned here?
Just trying to think through, “if it is so obvious, why isn’t everybody doing it?”
Another possible contributing factor: Famous firms like BH are able to use their notoriety to access reliable and valuable information (e.g. “is the management team any good?”). I’m sure a lot of people would love to wow Buffett with their astute insights into great values in their industry. (In the same way that a famous VC might be inundated with emails about the next hot thing.) You’d still have to work through a lot of chaff to find patterns. At least you’d have the raw material to find patterns, though.
The initial Tiny deal that was discussed relied heavily on the investor’s personal knowledge of the firm’s operators. This is similar in that it is an information asymmetry story.
A counterexample to this is the relatively early National Indemnity deal cited by the author in the opening of the piece. If Tiny is, indeed, recognizing outsized returns then that would also count against the importance of this factor.
I think this weights more then simply making it easy though having cash ready does make it easy.
What seems to be most consistent is having a motivated buyer and a motivated seller, and then it seems like it's just the parties involved making some compromise so that both make a good deal.
If both stand to win, I don't think just because BH gets a discounted price that makes it any less attractive: owners might just want to cash out and see seize the opportunity. If the owner doesn't want to sell you could even pay above market values and probably they won't part with it.
Just trying to think through, “if it is so obvious, why isn’t everybody doing it?”