Acquisitions are not made for reasons other than boosting long-term performance
Warren Buffett never did a thing or made a move that wasn't related to increasing the long-term performance of the company. If you follow a number of companies and watch their strategies and what they do to boost short-term numbers, it can sometimes border on sickening, as far as adding value to a company.
Not only are business leaders apt to make moves that are only connected to short-term results to make them look good, they are also tempted to make moves that enhance their egos, regardless of what the consequences may be over the long haul.
As someone said concerning Buffett: "There is no “wish list”, or ego-bolstering acquisitions masquerading as a strategic purchases."
Many times you see purchases that absolutely make no sense to companies or adding value to them, that's what we're talking about here. That hasn't been a problem with Buffett or Berkshire Hathaway (BRK-A), as they don't make decisions to prop things up or make them look good over short periods of time. It's not part of the DNA of the company.
The health of companies all over the world would increase and be enhanced for everyone, if they'd make decisions based upon what it can do for the company for years ahead. It's also a great filter that can be used to keep you in check if you can't answer that question.
If we can discipline ourselves to make decisions based upon long-term value to the company, we will pretty much stay out of trouble the vast majority of time, while growing our companies beyond what we may have ever dreamed of.
Other Buffett Sources:
10 Secrets Hidden in Warren Buffett's Wallet
The Warren Buffett You Don't Know
Warren Buffet-Strategic Planning
Some practical advice from investment guru Warren Buffett
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