Warren Buffett and Byron Trott are perhaps the most powerful dealmakers in the world. And they proved that this week when Buffett announced his plan to buy Pilot Flying J, one of America’s biggest family businesses in revenue terms after the legendary investor was introduced to the owner by Trott. Trott, who runs his increasingly influential investment firm from Chicago, is fast becoming Buffett’s understudy.
Given Buffett and Trott’s predilection towards family businesses and a huge cash pile at Berkshire Hathaway what’s next on the shopping list for Buffett with some advice from Trott? Here’s a fantasy shopping list of US family businesses that might interest the two – and a lot of other big investors as well.
Love’s Travel Stops
A similar business as Pilot Flying J, Love’s Travel Stops operates truck stops and convenience stores across the US, and many investors with big chequebooks would be interested in a minority, or more in Love’s. The Oklahoma-based business is 100% owned by the Love family after being set up in 1964 by Tom Love. He’s still running things as executive chairman and two of his sons have senior roles in the business. There’s no immediate reason to sell like an up and coming succession issue and no shortage of money – the business is one of the biggest private companies in the US, with annual revenues of more than $20 billion.
Gulf States Toyota
The big Toyota distributor in the US is 100% owned by the Friedkin family, but its founder, Thomas Hoyt Friedkin, died earlier this year. Might it be up for sale? Probably not. Gulf States Toyota is now run by Thomas’ son Dan Friedkin, who’s in his early 50s, so there are no obvious succession issues. But Buffett likes car dealerships, having bought the Van Tuyl Group in 2015, which at the time was America’s biggest privately owned automotive dealership group. And Gulf States Toyota won’t come cheap – the dealership has annual revenues of around $8 billion.
Buffett hasn’t bought too many tech companies, although Berkshire Hathaway owns around 2% of Apple. But Kingston Technology might be of interest if it was up for sale. Founded in California in 1987, Kingston is 100% owned by John Tu and David Sun. But Tu and Sun are getting on, Tu’s in his seventies and Sun’s in his sixties, and in the past, they’ve shown a willingness to sell after disposing of 80% of the business back in 1996 to Softbank, which they subsequently bought back a few years later.
Dot Foods is a big food redistributor that’s owned by the Tracy family. It has annual revenues of around $6 billion and is currently run and owned by the second generation of the Tracy family. It’s a classic Buffett-type company, family owned, based in the mid-west, and with a pretty simple, but highly profitable, business model.
Trammo is a huge commodities trading group based in New York and is 100% owned by the Stanton family. It makes sales of around $10 billion annually with just 350 employees. Founded by Ronald Stanton back in 1965, the Stanton involved in running the business these days is Ronald’s eldest son Oliver, who is a senior vice president. Ronald died more than a year ago, but there’s no indication the family want to bring in an outside investor and Oliver, who has a half sister and brother, looks like the heir apparent.