I wonder what the good reason to sell is that he described. Like he pointed out, when you sell youre moving your safe assets to risky assets. Odd.
That's not exactly what he is saying nor what he means. Both are risky assets. A 100% owned business you deeply understand is still a very risky asset. On its own. I agree with aeden's comment that diversification is one of the main reasons to sell.
The other good reason to sell...you get cash! Sure some of the cash will "probably" go to a diversified stock portfolio but some of it will be spent on cool stuff. You can't use stocks to buy your dream vacation home or donate money to charity for it to be spent on medical research. Cash is also the reason to sell.
Lastly, people die. A business founder must sell the business or give it to someone else at some point in one way or another or it will be done for him or her.
My understanding is that many businesses cannot support providing the Government with amount of cash necessary pay the tax, or the net reduction in income makes running the business not worthwhile.
Note how the letter is worded to carefully state that the family members will still have some ownership and management will be maintained. While this is certainly wise acquisition tactic, it is also very appealing to a seller who is on the margin and primarily selling to avoid the death tax.
(If you are thinking, "but the inheritor will still have to pay the tax on the cash," you are correct, but paying tax on cash still provides immediate payback with what is left over, whereas running or even just owning a business or any investment asset for 10+ years and getting zero or close to zero is not going to be desirable to a great many people.)
Now I think he's wrong about this. Rockefeller had a roughly ten times greater share of our nations wealth as Gates or Buffett ever had. And somehow our democracy survived and flourished, because inheritances typically get split up among children, grand-children and eventually hundreds of great-grand kids and great-great grand kids, and predominantly those descendants dissipate the wealth because they don't have the same drive or abilities as the wealth creator.
And lots of that money ends up in charities before it's all gone.
I specifically discussed sellers who are on the margin. While it can be difficult to know exactly how many of these are, I'm willing to bet this would result in a very real and measurable reduction in investment opportunity for Berkshire. If it were 10 businesses in a year at Buffet's stated minimum of $10 million annual net profit, then that would represent $80 million in annual revenue for Berkshire.
In the world of big business, famous personalities, and politics, my position is to assume the worst case scenario, which is that the only reason someone like Buffet supports the death tax is because he profits from it. In this case, it is not a coincidence.
If you always assume some extreme in the absence of evidence your assumptions are probably not going to be very accurate.
There's a bunch of evidence Buffett is not like that.
First, Buffett's minimum pretax profit hurdle for potential acquisitions is $75M a year, not $10M. Those people tend to have the best legal help possible to avoid/minimize estate tax.
Your opinions on mon-profit entities is anecdotal at best, all that matters for the purpose of the question at hand is how Buffets charitable contributions work and you haven't spent an iota of time learning about them, not that it stops your pontificating.
I disagree with Buffett on estate tax, but that doesn't make me blindly question his motives. There is a whole world out there full of people who may surprise you if you take off your political blinders.
The person running it is getting to retirement and the kids aren't that in to taking over, or some of the kids would rather have the cash - often the case in Buffett's purchases
You want to cash in and do something else eg. Paul Graham selling Viaweb and ending up with this YC stuff
Maybe diversification
Maybe you have VC like investors who want/need to monetize