An acquisition thesis is a one-page memo a buyer writes before looking at any company for sale: what kind of business, why it lasts, why this buyer, why now, and what would prove it wrong. Berkshire Hathaway printed a six-point version on the "Acquisition Criteria" page of its 2013 annual report (Berkshire Hathaway, 2013 annual report).
Why the memo comes before the search
A search for a company runs for months. Stanford Graduate School of Business's 2026 search fund study, which follows people who raise money to find, buy and run a single company, reports that an acquisition typically takes around 20 months, and that about half of the search funds launched between 2021 and 2024 had bought a company (Stanford GSB, July 2026). Every company a buyer meets over that stretch arrives with the seller's story, and the thesis is the page each story is checked against.
A published set of criteria
The 2013 page asked for six things. Purchases had to be large, at least $75 million of pre-tax earnings unless the business fit one of Berkshire's existing units (Berkshire Hathaway, 2013). The company needed a record of consistent earnings, since projections and turnarounds held no interest; good returns on equity with little or no debt; management already in place; a simple business; and a stated asking price.
The dollar floor sits far above any first purchase. The list still fits in half a page, with the exclusions beside the wants.
The five parts of the memo
Each part runs one short paragraph. A part that needs more than a paragraph marks a decision the buyer has not made yet.
What the buyer will buy
The kind of business, named narrowly enough that a listing can fail it. A line reading "a service business" fails nothing.
Made up to illustrate: the line "a commercial cleaning company with most of its revenue under contract, within 90 minutes of home" rules out every listing outside cleaning and every company more than 90 minutes away.
Why it lasts
Why customers go on needing this business for twenty years, whoever owns it. A reason tied to the current owner's friendships can leave with the owner. A reason such as an occupied building that has to be cleaned every week stays with the business.
Why this buyer
Skills, time, money and contacts, with the hours written as a number. A business that needs a full-time owner does not fit a buyer with twenty hours a week, whatever its numbers show.
Why now
What makes this kind of company available at a sensible price, in this region, on the date written at the top of the memo. A belief about the market goes down as a belief, with the check that would confirm or kill it.
What would prove it wrong
The facts that, if found, end the thesis. The next section covers how to write them.
The evidence that would end the thesis
Karl Popper argued that a claim can be tested only when some possible observation could contradict it, and that a claim compatible with every outcome cannot be tested at all (Stanford Encyclopedia of Philosophy). Two made-up thesis lines show the test. "Demand for this service is stable" survives any finding. "If most office cleaning contracts in the area are rebid every year and go to the lowest price, this market is wrong for this buyer" can fail, and a week of calls to building managers settles it.
Gary Klein's premortem gives the list a starting point. In his 2007 Harvard Business Review article, a project team imagines, before the work begins, that the project has already failed, and each member writes down plausible reasons (Klein, Harvard Business Review, 2007, subscription). For a thesis, the buyer pictures selling the company at a loss five years after buying it and writes down the likeliest causes. Each cause becomes a line in this section or a never rule in the buy box.
The inside view and the outside view
Daniel Kahneman and Dan Lovallo's 1993 paper in Management Science separates two ways of forecasting. The inside view anchors a prediction on the plan and its scenarios; the outside view looks at how similar efforts turned out. Their abstract traces overly optimistic forecasts to the inside view (Kahneman and Lovallo, Management Science, 1993).
A thesis is an inside view: it is built from the plan the buyer wrote. The Stanford figures above are one outside view of the search itself. For the business, the nearest outside view is people who already bought one of the same kind: a few conversations about what the first year took give the "why this buyer" and "why now" paragraphs something to be checked against.
A worked thesis for a cleaning company
The buyer, the region and every number in this example are made up. The finished memo fits on one page.
- What the buyer will buy. One commercial cleaning company serving offices, clinics and schools, with at least 60 percent of revenue under written contracts, large enough to pay a general manager, within 90 minutes of the buyer's home.
- Why it lasts, still to be checked. Occupied buildings get cleaned every week in good years and bad, and the work happens on site. The check is to ask five owners how their contract count changed in the last downturn.
- Why this buyer. Ten years managing hourly staff, schedules and customer complaints. Twenty hours a week available in the first year, and savings for part of the price.
- Why now, still to be checked. A belief that several owners in the region are close to retirement. The check is a count of current listings and conversations with two business brokers before the belief carries any weight.
- What would prove it wrong. A check of the area finds contracts rebid every year at the lowest price. Every company within budget depends on one customer for over a fifth of its revenue. No company on the list has a supervisor willing to stay after a sale.
The two lines marked "still to be checked" each name the check that settles them.
Writing the first draft
- Put the five part headings on one page.
- Write one paragraph under each.
- Write the "what would prove it wrong" list last, with at least three facts that can be learned before an offer.
- Date the page.
- Show it to one person who has bought a business of the same kind.
When the memo changes, the old copy stays beside the new one with a line saying why. The buyer in the example adds one rule: a change proposed right after meeting a company waits a week.
From thesis to buy box
The buy box turns the memo into rules a company passes or fails. How to build a buy box builds one for a similar invented buyer, and the buy box worksheet is the printable page.
Sources
- Berkshire Hathaway Inc., 2013 Annual Report, "Acquisition Criteria" page (the chairman's letter is dated February 28, 2014), as filed with the Securities and Exchange Commission: sec.gov
- Stanford Graduate School of Business, "Search Funds Keep Offering a Proven Path to Ownership," July 13, 2026, on the 2026 Search Fund Study by Peter Kelly, Stefanos Zenios and Dom Ng: gsb.stanford.edu
- Stephen Thornton, "Karl Popper," Stanford Encyclopedia of Philosophy, first published 1997, revised July 31, 2026: plato.stanford.edu
- Gary Klein, "Performing a Project Premortem," Harvard Business Review, September 2007 (the full article may need a subscription): hbr.org
- Daniel Kahneman and Dan Lovallo, "Timid Choices and Bold Forecasts: A Cognitive Perspective on Risk Taking," Management Science 39, no. 1 (1993), pages 17 to 31 (abstract): doi.org