Acquisitions Berkshire Hathaway Automotive Commentary

Commentary: Is a Boston Dealership Group a Likely Acquisition for Berkshire Hathaway Automotive?

(BRK.A), (BRK.B)

When Berkshire Hathaway jumped into the auto retailing business in March 2015, with its $4.1 billion acquisition of the Van Tuyl Group, it added a whole new line of business to the mega-conglomerate.

The Van Tuyl Group was the largest privately owned auto dealership group in the U.S., and instantly made the newly christened Berkshire Hathaway Automotive Group the fourth largest dealership group in the U.S.

The Van Tuyl acquisition was just the beginning, Warren Buffett noted in his 2015 Berkshire Hathaway Chairman’s Letter, stating, “…if we can buy dealerships at sensible prices – we will build a business that before long will be multiples the size of Van Tuyl’s $9 billion of sales.”

A Plum Waiting to be Picked

Now, a plum dealer group looks ready to sell and Berkshire Hathaway Automotive could be the perfect buyer.

Herb Chambers Companies, a privately-held, Boston-based dealership group with 55 total dealerships, looks to be the perfect fit for Berkshire Hathaway Automotive, and its owner looks ready to sell.

Herb Chambers, a former copier salesman who has spent the past thirty years building a first class dealership group that is the 12th largest privately held auto group in the nation, has already stated that he would sell if the price is right.

He also credits Warren Buffett’s Van Tuyl Group acquisition for boosting his personal net worth to some $1.5 billion, as valuations jumped throughout the whole sector, and private equity money, including financier George Soros, began looking to get in.

In the past, Chambers has turned down offers from AutoNation Inc. and Penske Automotive Group, but with valuations high for auto groups, there could no better time to cash out.

Berkshire Hathaway never likes to get into bidding wars, so what would make Chamber choose Berkshire?

With Berkshire Hathaway Automotive he could still remain in charge of his baby, just like Larry Van Tuyl, who became chairman of Berkshire Hathaway Automotive.

Unlike most private equity investors that quickly replace the existing leadership, Berkshire Hathaway looks as much as possible to keep talented managers at the helm. It was that arrangement that attracted Larry Van Tuyl to Berkshire. As Warren Buffet explained:

“Larry Van Tuyl, the company’s owner, and I met some years ago. He then decided that if he were ever to sell his company, its home should be Berkshire.”

Chambers Knows When to Sell

Herb Chambers is certainly not afraid to sell when the time is right. Three decades ago he founded A-Copy America, and after merging it with Ikon Office Solutions, he cashed out with a sale to Ricoh. It was a shrewd move, and Chambers has proved to be a shrewd guy who currently sells more cars than anyone else in New England.

Could the perfect exit strategy for Herb Chambers this time involve Berkshire?

Could be. After all, Chambers does have a photo of him and Buffett on the wall of his office.

© 2015 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.