A couple of weeks ago, in correspondence with me, Warren Buffett wrote that he would answer my question about why he had decided to offer the odd number of $848.02 a share, in cash, for Alleghany, the big insurance company he just bought for $11.6 billion. Buffett, being Buffett, was obviously up to something. As it turned out, he didn’t want to pay Goldman Sachs’ $27 million investment-banking fee for advising Alleghany on the sale to Berkshire Hathaway. 

This was quite a turn of events, given that Goldman Sachs has long been Buffett’s preferred Wall Street investment bank. He invested $5 billion in Goldman in 2008 at the height of the financial crisis and his favorite Wall Street banker, Byron Trott, was a longtime Goldman partner before he went out on his own. Plus, the purchaser of a company always ends up paying the seller’s banking, legal and accounting fees one way or the other. Believe me, no buyer likes to pay them, and would prefer not to, but convention is convention, and that’s the way it’s been, and will likely always be.