How Warren Buffett Is Preparing for His 60-Year Berkshire Reign to End

Warren Buffett has spent the last 60 years transforming Berkshire Hathaway from a failing textile factory into a more precious $ 1 Billion company than Tesla, Walmart or JPMorgan.

THE legendary investor took control of Berkshire in 1965 and constantly acquired dozens of companies, including the candies of Geico and See, and built participations of several billion dollars in public companies, notably Apple and Coca-Cola.

But at 94The company Titan knew that the end of the buffett era was close, so He carefully paved the way when he left.

On Saturday, in an arena in Omaha full of shareholders from Berkshire, Buffett announced that he would resign as CEO by the end of 2025.

Buffet warned its shareholders that the chronometer co -hidden on its mandate. He spoke Greg Abel and prepared the land for his planned successor.

“I think the time has happened when Greg should become director general of the company at the end of the year,” he said at the annual meeting in Omaha.

Buffett also sought to protect his heritage and ensure that his vast fortune would not be wasted once he left.

“Succession planning is the most important thing in corporate governance for an emblematic CEO,” the Center on corporate governance at the University of Delaware on corporate governance and the author of several books on Buffett and Berkshire told Business.

The Buffett conglomerate “provides an exemplary and underestimated model on how it can be done well,” continued Cunningham, adding that he “prepared the way not only for Greg succeeds Warren as CEO”, but also shareholders prepared for their business so that they no longer have a majority shareholder.

Go through the baton

“At 94, it will not take long before Greg Abel replaces me as CEO and wrote the annual letters,” said Buffett in February Missive to the shareholders of Berkshire, which makes it explicit that he will put back the reins.

The billionaire negotiation hunter has repeatedly reassured the shareholders that Abel is a Digne successor. In his letter, he wrote that in these rare moments when opportunities abound, Abel obviously showed his ability to act at times such as Charlie “, referring to his late trading partner, Charlie Munger.

Buffett joked at the annual meeting last year that the shareholders “do not have too much time to wait” a change of management. “I feel good, but I know the actuarial tables a little,” he joked.

The investor has mentioned in his letter that he now uses a rod to walk, perhaps reporting that he “plans to resign from CEO in the near future,” Bi Bi David Kass, a finance professor at Maryland University who has closely followed the Buffett company for four decades, in BIFF. He added that the nonagenarian could announce the decision from the Berkshire annual meeting in May.

Open the way

Buffett seemed to clean the bridges before the next captain took control of the ship, stacking the Berkshire cash reserve at nearly $ 348 billion.

This cash mountain can reflect a “desire to put a slate relatively specific to Greg” and allow it “to more easily execute the main function of a CEO, which allocates capital,” Kass to Bi told Bi.

During the annual shareholder meeting on Saturday, Buffett rejected speculation that he was preparing his planned successor and said that he “would do nothing almost as noble as to invest me just so that Greg may seem well”.

He added that it would be impatient to invest more had the right opportunity at an attractive price.

In recent years, Buffett and its placement managers have Sold several small but long investments, including General Motors and Procter & Gamble.

They have also collected $ 158 billion in shares on a clear basis in the past two years, which has helped stimulate Berkshire's cash battery at record levels. Their efforts could leave a lot of dry powder so that ABT spends in stocks or finally acquire the acquisition of the size of an elephant that has escaped Buffett for years.

Buffett and its deputies could withdraw purchases, increase sales and interrupt buyouts because the actions assessments have become too expensive. But they could also see the value of leaving a treasure chest so that Abel can draw and deploy as he wishes.

Protect your inheritance

Buffett revealed last year that when he died, his participation of around 14% in Berkshire – worth more than 150 billion dollars – will pass in a trust that counts his three children as a trustee, and they will have to vote unanimously to spend everything.

The plan not only protects money against the taxman and made them for worthy causes, but it also aims to thwart militant investors who could otherwise seek to buy buffett actions once he left and to claim his conglomerate to dismantle.

“I consider Berkshire Hathaway in a way as a painter considers a painting, the difference being that the canvas is unlimited,” said Buffett said in 2016Stressing his vision that the company will persist for generations.

In fact, Buffett's efforts to prepare his shareholders when he was released, express his confidence in Abel and put him in place to succeed, and protect his personal participation in the company, all speak of his dedication to what Berkshire develops long after his departure.

Buffett said at the annual meeting that he had “zero” intention “to sell a part of Berkshire Hathaway”.

“It will be given gradually,” he said. “I would add this: the decision to keep each part is an economic decision because I think that the prospects of Berkshire will be better under the direction of Greg than mine.”