In March, I noted that while Warren Buffett was disappointed he couldn’t seal the deal on any large acquisitions in 2012, he was quick to point out that Berkshire Hathaway Inc. (NYSE:BRK.A) had “a record year for ‘bolt-on’ purchases.”
In all, Berkshire Hathaway Inc. (NYSE:BRK.A) spent about $2.3 billion last year for 26 companies that were melded into its existing businesses.
While that amounted to a seemingly paltry $88.4 million per acquisition, the $2.3 billion total definitely wasn’t chump change. What’s more, Buffett also said he and Charlie Munger “love these acquisitions” because they are “low-risk, burden headquarters not at all, and expand the scope of [Berkshire Hathaway Inc. (NYSE:BRK.A)’s] proven managers.”
Now, growth-by-acquisition certainly isn’t a foreign concept, but it’s intriguing to know that a legendary investor like Buffett sees the value in buying multiple tiny companies to build up Berkshire Hathaway Inc. (NYSE:BRK.A)’s already-massive $280 billion market cap.
Buffett’s not alone
If you’re wondering who else might have a knack for making small acquisitions to build an empire, look no further than Apple Inc. (NASDAQ:AAPL) CEO Tim Cook.
But wait: Wasn’t Apple taking flak a few months ago for not putting that massive cash hoard to good use? After all, that’s also why the company raised its dividend by 15% while simultaneously boosting its share repurchase program by a record $50 billion in April, right?
That’s right, but remember that still represents just a fraction of Apple Inc. (NASDAQ:AAPL)’s ever-increasing cash pile, which grew 5.8% in the first three months of 2012 to a staggering $145 billion.
That’s why, when Cook was asked why Apple “doesn’t buy things with its money,” he responded:
We do acquire. The previous year, we were probably on a pace of acquiring a company every 60-75 days. Maybe six a year. Apple already acquired nine companies this fiscal year.
Considering Apple Inc. (NASDAQ:AAPL)’s current fiscal year started in October, that means the folks at Cupertino have picked up a new business every 27 days on average since then.