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what case are you referring to?

Berkshire Hathaway. Almost all of the business units are run by hungry entrepreneurs that live and breathe the business. They sold to Berkshire as a means of cashing out but most of the managers love to compete and stay on. As a result, they get to operate with an unusually high level of autonomy, I believe some of the managers only communicate with the home office once a year.

I think though the only reason that works is because Berkshire is buying great businesses with great managers at the helm. When you get into turnarounds/distressed businesses you end up having to roll up your sleeves and get involved much more frequently.

If you want to run a decentralized conglomerate, you have to look at what service you're providing the managers who actually run the business units. Otherwise, they're better off remaining independent, and you'll end up with a portfolio of mediocre businesses that consume more than they produce.

For Berkshire Hathaway, that service is liquidity. Buffett provides businesses with a large lump sum of cash, enough to ensure that they and their heirs will never have to work again unless they choose to. In return, they can continue running the business exactly as they did before. For many entrepreneurs, that's a very useful service.

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