2013 Berkshire Hathaway Letter to Shareholders
[Editor’s Note: The views expressed here are solely those of Ross Kaplan, and do not represent Edina Realty, Berkshire Hathaway, or any other entity referenced. Edina Realty is a subsidiary of multiple entities ultimately owned by Berkshire Hathaway.]
Perhaps the ultimate negotiating secret — buried in Warren Buffett’s most recent letter to Berkshire Hathaway shareholders — is . . . when not to (negotiate):
“I think back to August 30, 1983 — my birthday — when I went to see Mrs. B (Rose Blumkin), carrying a 11â„4-page purchase proposal for National Furniture Mart that I had drafted. Mrs. B accepted my offer without changing a word, and we completed the deal without the involvement of investment bankers or lawyers (an experience that can only be described as heavenly). Though the company’s financial statements were unaudited, I had no worries. Mrs. B simply told me what was what, and her word was good enough for me.”
–Warren Buffett; 2013 Berkshire Hathaway Shareholders Letter, page 13
Assuming that Mrs. B was paid mostly (or all) in Berkshire Hathaway stock, and that she and her family held on to it, it’s a safe bet that that deal ultimately made the Blumkins billionaires.
Legal Lessons
Buffet’s anecdote recalls a formative experience from my (increasingly distant) career as a corporate lawyer.
As a summer associate, one of my first assignments was to update the very dated lease for Har-Mar Mall* (still very much alive and well in Roseville, a Twin Cities suburb).
I diligently labored over the new-and-improved document for a full week, and ultimately came up with a state-of-the-art, 44 page retail lease with every conceivable legal bell & whistle.
Instead of praise when I presented my masterpiece, however, I got a tongue-lashing.
“You idiot!,” the partner yelled at me.
“This mall is full of small, Mom & Pop businesses who are going to be scared silly by what you drafted.
Tear this up, and bring me back a one-page document!”
Corollary to the above: ‘If there’s trust and good faith between two parties, a one-page contract is plenty. If there isn’t (trust and good faith) . . . . a 200-page contract isn’t nearly enough.”
*So-named for Harold and Marie Slawik.