By Ben Cohen

Warren Buffett had never heard of the man who would become one of his favorite CEOs -- until he decided to buy his company.

Berkshire Hathaway's leader was in his office in Omaha, Neb., one day 20 years ago when he received a two-page fax out of the blue pitching his next acquisition: an RV manufacturer called Forest River. At the time, Buffett didn't know the first thing about the business of recreational vehicles. Which meant he didn't know the name Pete Liegl.

And he really didn't know that he was dealing with "the George Washington on the Mount Rushmore of the RV industry," as one friend described Liegl.

But the world's most famous investor liked what he read and especially liked that Liegl came to him with a price in mind: $800 million. So he did some basic diligence. The next day, Buffett made an offer. The next week, Liegl came to Omaha. They met for 20 minutes and shook hands on a deal.

"It was easier to sell my business than to renew my driver's license," Liegl said at the time.

Berkshire has owned his RV company ever since -- even if Buffett himself says most of the company's shareholders don't know that Berkshire owns it.

Or at least they didn't until this past weekend, when Buffett's latest annual letter included a long remembrance of Liegl, who recently died at the age of 80.

Over the years, Buffett praised him as "a remarkable entrepreneur" who "runs a terrific operation." This time, he recognized Liegl as "a man unknown to most Berkshire shareholders, but one who contributed many billions to their aggregate wealth."

And the ultimate compliment for Liegl is that Berkshire has owned Forest River for two decades -- and Buffett has never once visited the company's offices.

These days, the business that Liegl founded in 1996, sold in 2005 and kept running for the rest of his life is one of America's leading RV manufacturers. At Berkshire, it's part of the consumer-products division with companies that make sneakers, underwear and Squishmallows. And this company that makes RVs now generates roughly $6 billion of annual revenue -- which means Forest River takes in about as much money each year as Ferrari.

Liegl may have been unknown outside the world of RVs. But inside that world, everyone knew him.

After he made a fortune and established himself as an industry legend, he still kept his hands on the wheel of his company and fingers on the pulse of his customers. He worked seven days a week and kept hours that he called half days: 7 a.m. till 7 p.m. Even his vacations included stops at RV dealerships. And when he was asked to explain his success, he always offered the same deceptively simple answer.

"The best product at the best price is everything," Liegl told RV Business, an industry publication, after closing the Berkshire deal. "No matter what the product is."

It's a formula for success in the business of RVs, campers, trailers, fifth-wheels, buses and pontoon boats -- or really any business.

Just ask Brad Gerstner. Before he worked with the CEOs of the world's most valuable companies as a prominent tech investor in Silicon Valley, Gerstner was a teenager near Elkhart, Ind., the RV capital of the world -- and one of his first jobs was working for Liegl.

The experience was so formative that he refers to his degree from Harvard Business School as his second business education.

"I earned an M.B.A. from Pete before I graduated from high school," said Gerstner, the founder of Altimeter Capital, a firm with $9 billion under management.

Liegl taught him the kinds of lessons that he couldn't have learned in a classroom. That's because he learned them by crawling through dumpsters.

When Liegl feared he was overpaying for waste management, he made Gerstner measure the inside of dumpsters to calculate the cubic feet of garbage. With that data, he renegotiated the deal and saved money on literal excess waste.

He understood the value of being resourceful, practical -- and frugal. When he took RV dealers for dinner, they went to Elkhart's hole-in-the-wall spots.

"You would never know that you were sitting in there with a master of the universe," said Jarrod McGhee, the owner of a dealership called Fun Town RV.

It's a dirty secret of the RV business that not everyone in the business RVs. Liegl was always RVing. Even when he brought his family to Disney World, they drove for 17 hours.

And if he took a company RV on vacation, he wouldn't let his wife or daughter use its bathroom or shower. After all, he still wanted to sell that RV.

Liegl wasn't the sort of CEO who answered emails around the clock. In fact, he only answered emails when his assistant printed them so he could handwrite responses -- and he refused to put a computer on his desk.

But he was driven by a work ethic that he developed in childhood. As a young boy, Liegl had a nasty case of spinal meningitis and came so close to death that he was read last rites. He survived. And by the age of 6, he was selling chicken eggs to neighbors. After studying accounting at Northern Michigan and getting an M.B.A. from Western Michigan, he remained in sales and entered the RV industry.

He eventually co-founded a manufacturer that he sold to investors who took it public in 1993 -- and fired him. Soon afterward, the company went broke. Liegl bought its assets out of bankruptcy and renamed the company Forest River.

Within a decade, he would sell the rebuilt company to Warren Buffett.

There was a reason Buffett forked over so much money for a business he knew so little about.

Actually, there were six.

When he evaluated companies to acquire, they had to meet a half-dozen criteria, including management in place ("we can't supply it"), an offering price ("we don't want to waste our time") and a simple business ("if there's lots of technology, we won't understand it"). The process was designed to be so easy that Buffett could promise swift responses -- usually within five minutes.

That's basically how long it took for him to look at Forest River and see that this RV company was a perfect fit.

"Pete and Berkshire are made for each other," Buffett has written.

Liegl thought so, too. He was selling the company to ensure long-term stability, but he wasn't going to sell to just anyone. After his experience with private equity, he wanted to maintain control of his business after the sale. And he specifically targeted Buffett because Liegl admired the way Berkshire maintained companies without meddling. "The important thing is that it's his company," Buffett once said. "I couldn't run an RV company."

Even today, he owns an RV company but doesn't own an RV. The one Forest River product that Buffett does have is a pontoon boat -- designed by Jimmy Buffett.

Besides his reputation, Liegl had another reason for choosing Warren Buffett. He believed that being a subsidiary of a much, much bigger company would be a massive competitive advantage in his cyclical business. And it wasn't long before he looked prescient. He sold the company in 2005 only to watch RVs crash with the rest of the economy in 2008. But because it was protected by Berkshire, Forest River was in position to gobble up rivals and market share.

In fact, it was during that industry downturn when Liegl was inducted into the RV industry's Hall of Fame. Buffett congratulated him with a gigantic mock telegram that he framed.

His latest tribute to Liegl came in the form of Buffett's annual letter, when he told the full story of the Forest River deal -- and the one part of the negotiation that floored him.

When it was time to discuss Liegl's compensation, Buffett asked him to name his salary and he would pay it. Liegl felt it would be awkward to make a penny more than his boss, so he suggested Buffett's modest salary of $100,000, plus an annual performance bonus.

Once the deal was done, there was just one last thing to do before they "lived happily ever after," as Buffett put it.

That night, they went for a celebratory dinner at the Happy Hollow country club where Liegl toasted with a Bud Light and Buffett ordered his cheeseburger and Coke. Then he gave the Liegl family a ride back to the airport and they flew home with nothing but the open road ahead.

Write to Ben Cohen at ben.cohen@wsj.com

(END) Dow Jones Newswires

February 28, 2025 21:00 ET (02:00 GMT)

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