In 1983, Warren Buffett made one of his most memorable deals, buying 80% of Nebraska Furniture Mart (NFM) for $60 million. The remarkable part? There was no formal audit, no complex paperwork and certainly no corporate due diligence as we know it today.
Instead, Buffett relied on something simpler: his experience shopping at the store and his immense respect for its founder, Rose Blumkin, better known as “Mrs. B.”
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Mrs. B founded NFM in Omaha, Nebraska, in 1937 with a $500 loan. Over the decades, she built it into North America’s largest home furnishings store, undercutting competitors by offering better prices and sourcing products from anywhere she could.
The bigger furniture stores tried to shut her down by cutting off her suppliers, but Mrs. B found a way around it – she secured her stock from suppliers across the country and kept her prices low.
Buffett jumped when Mrs. B decided to sell 80% of her company. At the time, she was 89 years old and felt it was better to sell while she was still alive to prevent any family disputes over ownership. The deal between Buffett and Mrs. B was so simple that it was done on a single piece of paper.
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Buffett didn’t bother with a detailed financial audit. Instead, he asked Mrs. B if she owned the building and had any debts. When she said yes and no, respectively, that was all Buffett needed.
As Buffett said, “This purchase is being made without any audit whatsoever of the books or the inventory or anything about this business – and that’s unheard of in business.”
Even after the sale, Mrs. B continued working her typical 70-hour workweek, navigating the store in her electric scooter. But in 1989, her family pushed her into retirement at 95. She wasn’t happy about it and because Buffett hadn’t included a noncompete clause in their handshake deal, Mrs. B decided to open a rival store called “Mrs. B's Clearance and Factory Outlet” right across the street from NFM.
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Within two years, Mrs. B’s new store became Omaha’s third-largest carpet outlet. Once again, Buffett bought her out, but this time, he brought proper paperwork. He understood by now that even at 95, Mrs. B had no intention of slowing down.
“Put her up against the top graduates of the top business schools or chief executives of the Fortune 500 and, assuming an even start with the same resources, she'd run rings around them,” Buffett once said about Mrs. B.
Over the years, NFM continued to grow, opening new locations in Iowa, Kansas and Texas. The Texas store, which opened in 2015, became a massive 1.8 million-square-foot operation – the largest home furnishing store under one roof in the world, according to Buffett. NFM also expanded beyond furniture, adding electronics and appliances to its product lineup.
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