Global mergers and acquisitions activity hit record highs during the pandemic as companies took significant steps to shape the trajectory of their futures in a post-COVID world. However, Berkshire Hathaway (BRK-A, BRK-B) notably did not acquire any large companies throughout the pandemic.

Berkshire Hathaway Vice Chairman and Daily Journal (DJCO) Chairman Charlie Munger explained the reason behind Berkshire’s lack of M&A over the past two years at the Daily Journal’s annual shareholders’ meeting.

'We're using our own money, or at least that's the way we think of it'

“No, [Berkshire management is not getting too conservative with M&A], the reason we're not buying is we can't buy anything at the prices we're willing to pay. It's just that simple,” he said.

Munger believes that the private equity space is to blame for the inflated valuations of companies in Berkshire’s eyes.

“Other people are bidding the prices up. And a lot of the buying is not by people who really plan to own them. A lot of it is fee-driven buying,” he added. “Private equity buys things so they can have more fees by having more things under management. Of course, it's a lot easier to buy something when you use somebody else's money. We're using our own money, or at least that's the way we think of it.”

Munger answered questions related to Berkshire Hathaway, Chinese markets, the COVID-19 outlook, cryptocurrencies, and other issues at the meeting. He was also joined by DJCO President and CEO Jerry Salzman.

And with M&A activity expected to remain hot this year—Morgan Stanley (MS) believes that many strengths in the M&A market remain in place, though 2022 may not be a record year like 2021—Munger noted that it isn’t necessarily a bad thing that Berkshire has some surplus cash on hand that it is not investing.

“We look more responsible with the extra wealth, and we are more responsible with the extra wealth,” he said. “But if the shareholders are worried about the future because it looks complicated and difficult and there are hazards, I want to say to them what my old professor said to me—he'd say, ‘Charlie, tell me what your problem is, and I'll try and make it more difficult for you.’”

Thomas Hum is a writer at Yahoo Finance. Follow him on Twitter @thomashumTV

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