Warren Buffet Buys Precision Castparts

Published Date : Aug 11, 2015

After years of doing business with small and midsize acquisitions in the effort to expand the product offerings for customers like Airbus and Boeing, Precision Castparts will now be acquired by Berkshire Hathaway. 
The chairman and chief executive officer of Precision Castparts, Mark Donegan has made more than a few more deals in his career before becoming a billionaire icon of the Berkshire Hathaway. Berkshire Hathaway is a Warren Buffet’s foundation acquired for $37.2 billion.  

Precision Castparts is a maker of equipment for the energy and aerospace industries. It has completed 30 acquisitions since Mark took over as the CEO in 2002. For them buying companies is always going to be the company’s forte, he informed the analysts in January. He also said that the company has abundant opportunities in front of them of which all are right for the business. 

Precision Castparts has consistently maintained its profit margins for years with small and midsize acquisitions in order to expand its product offerings and portfolio to the customers such as Airbus and Boeing.  

A senior analyst at Edward Jones & Co. said Mark is one of the main people driving that strategy. He is very solid and a strong executive. 

Warren Buffet’s typical approach is to treasure the key officers whenever he buys a company. He is not the one to run Berkshire. Buffet said that they love what they’re doing and that’s the whole beauty of it. 

Berkshire likes to maintain a high-quality management team that can be effective to its vast cash pile, added a senior credit analyst with Bloomberg intelligence. 

Ever since Mark became the CEO he has overseen around $8.1 bn in acquisitions all based on 12 deals for which the financial terms are available. 

One of the biggest deals was the $2.9 bn purchase of the Titanium Metals Corp – the industrial parts maker. Mark has been able to maintain its gross margins of 30% or more since 2010 and annual operating margins of 22% since 2008.