We are eager to hear from principals about businesses that meet all of the following criteria:
- At least $2 million of pre-tax earnings.
- Demonstrated consistent earning power (future projections are of no interest to us, nor are “turnaround” situations).
- Businesses earning good returns on equity while employing little or no debt.
- Management in place (we can’t supply it).
- Simple businesses (if there’s lots of technology, we won’t understand it).
- An offering price (we don’t want to waste our time or that of the seller by talking, even preliminarily, about a transaction when price is unknown).
The larger the company, the greater will be our interest: We would love to make an acquisition in the $50-150 million range.
Dhandho will not engage in unfriendly takeovers. We can promise complete confidentiality and a very fast answer — customarily within five minutes — as to whether we’re interested. We prefer to buy for cash, but will consider issuing stock/units when we receive as much in intrinsic business value as we give.
Even the not so diligent reader will notice that Dhandho’s Acquisition Criteria seems similar to Berkshire Hathaway (except that the size of businesses we’re interested in would be a rounding error for Berkshire). This similarity is not a coincidence. It was lifted from Berkshire and lightly edited for our purposes.