Pilot claims accounting adjustments will potentially shortchange the family that once controlled it.
Warren Buffett has long championed Berkshire Hathaway as the best home for sizable private companies seeking a buyer, saying that the conglomerate would treat them like fine art and never sell them, a contrast with more rapacious private equity purchasers.
But Pilot alleges in its lawsuit filed in Delaware last week that Berkshire Hathaway is positioning itself to pay less by changing the accounting for Pilot’s financial results without its consent.Berkshire Hathaway shifted Pilot’s accounting from historical to so-called pushdown accounting in March 2023. Such a change is entirely appropriate, says New York accounting expert Robert Willens who says it’s commonly done by buyers after acquisitions.
The change to pushdown accounting results in the creation of significant noncash amortization and depreciation that depresses reported earnings but “does nothing to change the value or performance of PTC’s business,” the suit states. PTC refers to Pilot Travel Centers. The suit names Berkshire Hathaway Vice Chairman Greg Abel, Buffett’s heir apparent as CEO, as well as four other executives at Berkshire Hathaway who are on the seven-member Pilot board.
Buffett and Vice Chairman Charlie Munger have positioned Berkshire Hathaway as a benevolent acquirer of private companies that often leaves management in place, doesn’t slash costs and jobs, and holds the businesses indefinitely. Berkshire Hathaway is decentralized with the company historically doing little meddling at subsidiaries.
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