Law Commons^™

Berkshire's Disintermediation: Buffett's New Managerial Model, Lawrence A. Cunningham

GW Law Faculty Publications & Other Works

Berkshire Hathaway, among history’s largest and most successful corporations, shuns middlemen; its chairman, the legendary investor Warren Buffett, excoriates financial intermediaries. The acquisitive conglomerate rarely borrows money, retains brokers, or hires consultants. Its governance is lean, using an advisory board and bucking all forms of corporate bureaucracy. Berkshire’s shareholders also minimize the roles of intermediaries like stockbrokers and stock exchanges by trading little and holding for lengthy periods.

By exploring Berkshire’s antipathy to intermediation, this article supports the view that public policy ought to make considerable room for companies to define their own internal business practices and that more companies …

Berkshire Versus Kkr: Intermediary Influence And Competition, Lawrence A. Cunningham

GW Law Faculty Publications & Other Works

Kathryn Judge of Columbia University documents how financial intermediaries persistently impose high fees compared to the value rendered, attributes this to political influence, and suggests countervailing policy strategies, including stoking competition and enhancing disclosure to reduce excessive transaction costs. In this solicited comment, I concur with Judge's findings and prescriptions by adding a paired example: that of Berkshire Hathaway versus Kohlberg Kravis Roberts. In the field of corporate acquisitions, these rivals are opposites, Berkshire shunning intermediaries and generating virtually no transaction costs while KKR feasts on multiple and lavish fees. The contrast reflects broader differences between Berkshire and private equity …