Unlike PE or public companies, long-held private family businesses often prioritize stable, growing dividends. Executives may be rewarded on enterprise value, but must align M&A strategy with the family's goal of dividend growth, as rising enterprise value can create undesirable tax burdens for shareholders.

To effectively influence a company's capital allocation, build a long-term relationship and privately educate management on your thought process. Avoid public activism or short-term demands like immediate share buybacks, which management teams often see through and dismiss.

After a large, debt-funded acquisition, deleveraging should be the top priority over share buybacks. Choosing buybacks sends a mixed signal, disappoints investors expecting a return to the growth playbook, and leaves the company too financially constrained to pursue future strategic M&A opportunities.

Many UK companies maintain dividends due to a historical "dividend culture" driven by once-dominant income funds like Neil Woodford's. With those investors gone, the rationale has weakened, creating an opportunity for activists to push for more efficient capital allocation, such as share buybacks.

The argument that Disney's market cap is less than its acquisition costs presents a flawed picture of value creation. This analysis fails to account for the approximately $70 billion returned to shareholders via dividends and buybacks over the same period. A true assessment of an M&A strategy's success must include capital returned, not just final enterprise value.

To maintain pricing discipline, Fairfax has a strict M&A rule: it never participates in auctions or bidding wars. Once an offer is made, it's final. This strategy prevents them from overpaying and ensures they only acquire companies at prices that offer attractive future returns.

Though Berkshire Hathaway doesn't pay a dividend, its success is built on receiving massive cash dividends from its portfolio of companies. It functions as a holding company where investors trust management to reinvest that dividend cash flow, confirming the underlying power of owning dividend-generating assets.

Forcing companies to pay a base dividend plus a variable special dividend based on excess cash flow is a more effective capital return policy. This structure, used by some O&G companies, instills discipline, avoids value-destructive buybacks at market peaks, and aligns payouts with business cyclicality.

For indefinite-hold companies, executive wealth is created through a stream of cash, not a future sale. Management earns equity over time in unlevered businesses, allowing them to receive meaningful cash distributions. This aligns incentives for long-term, sustainable profit growth rather than a quick flip.