Warren Buffett knew nothing about this business, and he made billions from him

And he really didn’t know he had a business with “the most revered man of the trailer industry,” as he described one of his friends. But what the world’s most famous investor has liked, and most of all, he liked the fact that Gel came to him after he had already thought of a price: $ 800 million. So he conducted some basic tests, and the next day he offered an offer.

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The following week, Ligel arrived at Nahaha. They met for 20 minutes and click hands on a deal. “It was easier to sell my business than to renew my driver’s license,” Ligel said.

Ligel’s success secret

Since Berkshire has been holding his trailer company – even if Buffett itself says most of the company’s shareholders do not know that Berkshire is its owner. Or at least they didn’t know this until last week. Buffett’s last annual letter included long separation remarks in memory of Ligal, who recently died at the age of 80.

Over the years, Buffett praised him as an “unusual entrepreneur” that “excellent business manager”. This time, he noted Ligal as “a man who was unknown to most shareholders in Berkshire, but one that contributed many billions to their cumulative wealth.” And the ultimate compliment for Ligel is that Busshire holds Forst River for two decades – and on the top she has never visited the company’s offices.

These days, the business that Legel founded in 1996, sold in 2005 and continued to run until the end of his life is one of America’s leading trailer manufacturers. In Berkshire, it is part of the consumer products division along with companies that manufacture sneakers, underwear and “Skwishzello” dolls. And this company, which manufactures leisure vehicles, now produces about $ 6 billion from annual income – which means Forst River every year puts similar sums of money to those of Ferrari.

Ligal may have been unknown outside the trailer world, but within this world everyone knew him. Even after making a fortune and based his status as a legend in the industry, he left his hands on the company’s steering wheel and his fingers on the pulse of his clients. He worked seven days a week, and made sure to work hours he called halves: 7 am to 7 pm. Even his vacations included constipation at trailer agencies.

When asked to explain his success, Ligal always gave the same seemingly simple answer: “The best product at the best price is everything,” RV Business, an industry newsletter, told Berkshire’s deal. “No matter what the product is.” This is the formula for success in the business of trailers, camping equipment, trailer cars, buses and boats – or really in any business.

Business education in the field

Anyone who can agree with things is Brad Gersner. Before he worked with the CEOs of the world’s highest -value companies as a prominent technological investor in Silicon Valley, Gersner lived as a teenager near the “Caravan capital” Elakhart, Indiana, and one of his first jobs was a job for Ligal.

“I completed a MBA degree with Pete before I finished high school,” said Gersner, the founder of Altimeter Capital, a company that runs $ 9 billion. Ligal taught the same things he couldn’t study in the classroom, because he learned them through crawling through garbage containers.

When Agel feared he was over -paying for waste management, he sent Gersner to measure the face of the garbage vessels to calculate the volume of trash. With this data, he re -charged the deal, and saved money on unnecessary waste. He understood the value of being resourceful, practical – and savored.

When he ordered trailer agents for dinner, they went to Alcart’s smaller and less familiar places. “You were never guessing you were sitting there with one of the universe rules,” said Jereod McGee, the owner of an agency called Fun Town RV.

A dirty secret of the trailer business is that not everyone in this business is traveled in the trailers. Ligel always used in trailers. Even when he took his family to Disney World, they traveled for 17 hours. And if he took the company’s trailer for vacation, he did not allow his wife or daughter to use his bathroom or shower. After all, he still wanted to sell this trailer.

Ligel was not the kind of CEO who answered emails around the clock.

But he was driven by a work ethic that he developed as a child. As a small child, Ligel suffered from a severe case of meningitis and so close to death that he read the separation prayers. He survived. And until the age of 6, he sells chicken eggs to neighbors. After studying accounting at Michigan University and receiving a MBA degree from the University of Michigan, he remained in the sales area and entered the trailer industry.

In the end, he set up a trailer manufacturing business and sold it to investors. They issued it to the public in 1993 – and fired it. Shortly thereafter, the company went into dismantling. Ligel purchased the company’s assets as part of a bankruptcy proceeding, and changed its name to Forst River. Within a decade, he sold the rebuilding company to Warren Buffett.

Buffett’s reasons

There was a reason why Buffet had spent so much money on a business he knew so little. In fact, there were six reasons.

When he estimated companies to purchase, they had to meet half a dozen criteria, including an existing management (“We can’t provide it”), a proposal price (“We don’t want to spend our time”) and a simple business (“If there is a lot of technology, we won’t understand it”). The process was designed to be so simple that Buffet could guarantee quick reactions – usually in five minutes.

And it’s more or less the time he needs to look at Forrest River and see that this trailer company is perfectly suitable. “Pitt and Barkshire were intended for each other,” Buffett wrote.

Ligal also thought so. He sold the company to ensure long -term stability, but he did not intend to sell it for just anyone. After his experience with private capital, he wanted to maintain control of his business after the sale. And he was particularly directed to Buffet, because Ligel admired how Berkshire manages corporate without interfering. “The important thing is that this is his girlfriend,” Buffett once said. “I was unable to run a trailer.”

Even today, he holds a trailer but is not a trailer. Forest River’s only product to Buffett is the Ponton boat – designed by the late singer Jimmy Buffett.

Apart from Warren Buffett’s reputation, Ligal had another reason to choose him. It is believed that being a subsidiary of a company is more and more likely to have a huge competitive advantage in its cyclical business. And it wasn’t long before it became clear that he saw the newborn. He sold the company in 2005, and then saw the trailer business crashing with the rest of the economy in 2008. But because the company was protected by Berkshire, Forest River was in a position that allowed her to gobble up opponents and a market share.

In fact, Ligel entered the Caravan industry’s Hall of Fame during an industry low period. Buffett welcomed him with a huge simulated telegram he was closing.

Buffet’s last tribute to Ligal came in his annual letter, telling the full story of the Forrest River deal – and the only part of the negotiations that stunned him: When it was time to discuss Ligal’s salary, Buffett asked him to mark the salary he wanted, and Buffett would pay her. Ligel felt it would be embarrassing to earn more than his boss, so he offered Buffet’s modest salary, $ 100,000 a year, plus a bonus of an annual performance.

After the deal was completed, there was only a last thing to do before they “lived happily and wealth to this day,” as she was put on Buffett. That night, they went to a festive dinner at Country Club Happy Hollow, where Ligel welcomed with a glass of “Bad Light” and on top to invite his chizbourger and her voice. Then he gave the Ligel family to the airport, and they flew home with their eyes only the open way.