2008: Will Berkshire get broken up after Buffett?

AUDIENCE MEMBER: Hello. Good afternoon, Warren and Charlie. I want to thank you for hosting this annual meeting.

My name is James (inaudible) from East Brunswick, New Jersey.

I don’t want to sound morbid, but my question is, once you two are gone and Warren’s stock is placed in trust and slowly forced to be sold over the years, what safeguards are in place to prevent a hedge fund or LBO shops from joining together and acquiring Berkshire Hathaway, and putting in play and breaking up this wonderful company and endangering the culture of this company?

WARREN BUFFETT: Well, my stock would be sold over about a 12-year period after my death.

During the time of settling the estate, it gets disposed of in the same manner as presently, and then it gets on a time clock.

So that takes a lot of time. I may live a little longer, even, than now, but even if that started now, you would be dealing, I hope, with a company that had a market value much larger than even we presently have, and you’d still have large blocks of stocks held by institutions or people that certainly had a similar philosophy.

There’s no guarantee that if somebody wanted to try a 6- or $700 billion takeover — and it might be, you know, a lot larger than that if you go out a ways — that it can’t be done.

But I think it would be about as unlikely to happen in the case of Berkshire as any company I can think of in the world.

It can’t happen at all, in effect, until sometime after I die. There will be a lot of votes concentrated until that period.

And like Charlie says, I’ve told — there’s this period after I die before this 10-year distribution period kicks in — so I’ve told my lawyer to make sure that my estate lasts for quite a while. And he says that’s like telling your teenage son to have a normal sex life, when you tell a lawyer that.

But it will be a long time. And like I say, if we do anything in the way of decent rates of compounding, you really are talking, you know, one of the very largest companies in the United States.

And I don’t think anybody’s going — I don’t think there’s going to be an LBO of General Electric or Exxon, and I think it would be equally difficult with Berkshire. There’s no 100 percent guarantee, however.

Charlie?

CHARLIE MUNGER: Yeah. And, besides, Warren doesn’t plan to leave very early.

I’ve heard him say several times when people ask him what he wants said at his funeral. And he always gives the same answer. He says he wants people to say, “That’s the oldest-looking corpse I ever saw.” (Laughter)

WARREN BUFFETT: And I’m unlikely to change my views on that subject. (Laughs)

But thanks for asking. (Laughs)