Warren Buffett is renowned for his distinctive style of conducting business acquisitions, often characterized by simplicity and a profound emphasis on trust. A notable episode in his investment career involves the purchase of Forest River, a recreational vehicle manufacturer based in Indiana, for $1.7 billion. This deal stands out not only for its financial scale but also for Buffett's extraordinary move to allow the company's founder, Pete Liegl, to determine his own compensation — a proposition Buffett accepted without hesitation.
Buffett first became aware of Forest River through a letter from Pete Liegl, who owned the entirety of the company and was interested in selling. Liegl was straightforward about his asking price, which appealed to Buffett's preference for uncomplicated transactions. After consulting RV dealers about the company's market reputation and receiving positive feedback, Buffett invited Liegl to Omaha, Nebraska, to discuss the potential acquisition.
During their meeting, Buffett eschewed elaborate valuations and drawn-out negotiations, adhering instead to a direct and candid approach. When the topic of Liegl's salary arose, Buffett posed an unusual question: he asked Liegl to name the compensation he believed appropriate, assuring him that he would agree to it regardless of the amount. Buffett cautioned, however, that this method was not a standard recommendation for all business dealings.
In response, Liegl requested an annual salary of $100,000 — mirroring Buffett's own long-held CEO salary at Berkshire Hathaway — plus a 10% bonus on profits exceeding the company's current performance level. Buffett swiftly approved these terms without further debate. This straightforward agreement eliminated typical complexities such as legal fees calculated by time or intricate earnout mechanisms, resulting in a smooth and drama-free transaction.
Following the acquisition, Pete Liegl remained at the helm of Forest River for nearly 20 years, consistently outperforming competitors and significantly enhancing shareholder value. Buffett credits Liegl with generating “many billions” in wealth for investors and regards the acquisition as one of his most successful. Liegl led the company until his passing in 2024 at the age of 80.
The acquisition story underscores several core principles that Buffett values, especially his skepticism toward conventional credentials. He explicitly noted his disregard for academic backgrounds when evaluating candidates, instead prioritizing innate talent, sound judgment, and integrity — qualities Liegl evidently possessed. This philosophy has enabled Buffett to complete acquisitions based largely on financial data and instinct, sometimes foregoing site visits or comprehensive factory inspections.
The Forest River deal exemplifies Buffett’s broader investment philosophy favoring simplicity. Rather than relying on elaborate business plans or presentations, he concentrates on the character of the individuals involved and the fundamental accounting metrics. Liegl’s proven competence and trustworthy nature fit perfectly within this framework.
Despite his many triumphs, Buffett acknowledges experiencing errors in judgment with some acquisitions or personnel. Nonetheless, he emphasizes that such mistakes fade over time, while successful investments flourish indefinitely. By this measure, the Forest River acquisition and Liegl’s leadership represent a standout success in Buffett’s storied career.
In summary, the Forest River acquisition reflects Warren Buffett's unique approach to deal-making, characterized by trust, simplicity, and an emphasis on individual competence rather than formal credentials. The decision to allow Pete Liegl to choose his own salary was emblematic of this philosophy and contributed to a long-term partnership that provided substantial rewards for shareholders.