Investment Q&A

There are a few reasons why CSU chose the spin-off path while BRK.B did not. Firstly, the spin-offs are usually done in conjunction with a targeted acquisition. For example, one of the key terms TOI’s previous owners insisted on was to maintain its identity as a separately traded company. Secondly, a separately traded entity also provides liquidity for shareholders who own a minority interest in the acquired company. In addition, investors can have a pure player focusing on specific verticals (TOI – European VMS market, LMN.V – focusing on US media vertical). Lastly, as these entities are much smaller and with higher organic growth, the market should reward with a higher multiple. BRK.B did trade at a slight discount on the sum of the part basis (considering the investment portfolio + cash + operating subsidiaries), but the flexibility of moving capital within the same entity tax-free is more valuable than the discount. Also, BRK.B demonstrated the willing to repurchase shares if the discount is large enough.