What happens to Berkshire Hathaway when Warren Buffet dies?

The Oracle of Omaha is 77 years old and though he's "never felt better," a lot of people wonder what will happen to Berkshire Hathaway both from a share value/price perspective and an ownership/succession perspective.

Berskhire is a fascinating holding company because of how closely it represents the genius of one man. Mr. Buffet has built the organization in a manner that intractably reflects what he deems to be in the best interest of himself and equally, his shareholders. He guides all the plays and is wholly involved in every decision—he's not running things from the sidelines; the success of BRK is his, near-completely.

When he dies, BRK will slip quite a bit; perhaps as much as 20%, knock on wood. That day will represent the best single day one could buy BRK because of one simple concept: intrinsic value. The pure, intrinsic value of Berkshire is the mark-to-market value of all of its holdings at any given point. Mr. Buffet or no, the company's holdings value is closer to the $5,500-$6,000/B-share mark. BRK stays out of high risk, high-liability holdings by its nature and has a lot of flexibility/cushion from its wonderful insurance float. Because of this, it has high earnings, low debt and immense stability even when facing recession (an opportunity to buy up undervalued, high-potential companies, says Buffet) or in the face of inflation.

That said, there is some very clear, high value add from Mr. Buffet's leadership. While there are others intimately acquainted with his strategies and approaches and ethics towards running the company, he has professed an exception quality of wisdom and patience with a flair towards risk aversion and greed aversion in just the right quantities. While he maintains a list of his own hand-picked successors should the need arise, we can only hope that they'd be wise enough to continue using his formula and stay the course.

Which is to say, beyond an initial massive shock in the market and BRK at large, (if that; most BRK holders know Warren's approach and succession plans and would likely not be too phased at first) the stock will recover swiftly because of how undervalued it will quickly become. What happens past that will be in large part a function of who is named successor and the confidence level a passed on Buffet is able to instill in shareholders in them, in addition to how they perform straight away.

For now, I'd much prefer Mr. Buffet alive and well. As he says in his BRK owner's manual:

Lest we end on a morbid note, I also want to assure you that I have never felt better. I love running Berkshire, and if enjoying life promotes longevity, Methuselah’s record is in jeopardy.