Legend has it that Donald Yale (vice president, shareholder and member of the family) prompted Buffett to think about buying Borsheims. Buffett had shopped there for years, and as Christmas 1988 approached he was looking for a ring. Well-known to the staff, a little banter was normal.
While he was looking, Yale yelled out “Don’t sell Warren the ring, sell him the store!”. After the holidays Buffett called to ask if a sale was possible. A short meeting was arranged in February with Ike Friedman and Donald Yale at Friedman’s house.
The deal was agreed in only 10 minutes during which Buffett asked five questions (he already knew the business didn’t have debt and he knew about the excellent reputation it enjoyed):
- What are sales?
- What are gross profits?
- What are expenses?
- What is the inventory?
- Are you willing to stay on?
The first four – answered without referring to notes – confirmed that the business was in excellent shape. The fifth was answered in the affirmative, providing Buffett with his key people, Ike in particular, to take the business forward.
A cash payment was made for 80% of the shares, with a legal document that ran to only a page or so and cost $1,100 in lawyer’s fees.
They all agreed not to disclose the price – rumour has it that it
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