The GEICO acquisition serves the long-term goals of Berkshire Hathaway since it meets the IS percent annual growth rate in intrinsic value. The intrinsic value is defined as the discounted value of the cash that can be taken out of a business during its remaining life. It is also a logical way to evaluate the relative attractiveness of investments and business, looking toward the future of the company. 1 found that the bid price was appropriate and a great investment for Berkshire and the shareholders of the company. Even though GEICO was the lowest cost insurance provider in the industry, in 1994, Berkshire portfolio of business included the following focusing on property and casualty insurance, on both a direct and reinsurance basic. The 2.3 billion dollar deal did give GEICO shareholders a great increase in their market share. With this 26 percent premium Berkshire '"731_11d pay particularly since Buffett proposed to change nothing about GEICO and the two firms were not going to combine. Once announced the shares increased for Berkshire to 718 million in one day. Due to the outcome of Warren E. Buffett buying GEICO the amount bid could have been a lot less and he still WJuld have got the share holders to sell with even a lower increase than 49.6 percent.