The Analysis of the Acquisition Premiums Paid by Warren Buffett for Public Companies

Student: Marina Alena

Supervisor: Elena V. Chirkova

Educational Programme: Strategic Corporate Finance (Master)

Year of Graduation: 2017

Buffett is famous for his unwillingness to participate in M&A beauty contests and overpay for his investments. Aimed at unraveling of Warren Buffett phenomenon we examine what can affect low price paid by Warren Buffett in M&A deals. We studied four factors, which are control premium, P/E multiple, target companies performance and market conditions. We found out that control premiums paid by Warren Buffett are lower than market average as well as target company P/E paid in M&A deals. We revealed that Buffett is unwilling to buy companies from glamorous industries and that his ability of obtaining above average returns can’t be explained by market tracing.

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