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Barbarians at the Gate: The Fall of RJR Nabisco

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A #1 New York Times bestseller and arguably the best business narrative ever written, Barbarians at the Gate is the classic account of the fall of RJR Nabisco. An enduring masterpiece of investigative journalism by Bryan Burrough and John Helyar, it includes a new afterword by the authors that brings this remarkable story of greed and double-dealings up to date twenty years after the famed deal. The Los Angeles Times calls Barbarians at the Gate, “Superlative.” The Chicago Tribune raves, “It’s hard to imagine a better story...and it’s hard to imagine a better account.” And in an era of spectacular business crashes and federal bailouts, it still stands as a valuable cautionary tale that must be heeded.

592 pages, Paperback

First published January 1, 1989

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About the author

Bryan Burrough

13 books323 followers
Bryan Burrough joined Vanity Fair in August 1992 and has been a special correspondent for the magazine since January 1995. He has reported on a wide range of topics, including the events that led to the war in Iraq, the disappearance of Natalee Holloway, and the Anthony Pellicano case. His profile subjects have included Sumner Redstone, Larry Ellison, Mike Ovitz, and Ivan Boesky.

Prior to joining Vanity Fair, Burrough was an investigative reporter at The Wall Street Journal. In 1990, with Journal colleague John Heylar, he co-authored Barbarians at the Gate (HarperCollins), which was No. 1 on the New York Times nonfiction best-seller list for 39 weeks. Burrough's oth­er books include Vendetta: American Express and the Smearing of Edmund Safra (HarperCollins, 1992), Dragonfly: NASA and the Crisis Aboard Mir (HarperCollins, 1998); and Public Enemies: America's Greatest Crime Wave and the Birth of the FBI, 1933–34 (Penguin Press, 2004).

Burrough is a three-time winner of the John Hancock Award for excellence in financial journalism. He lives in Summit, New Jersey with his wife Marla and their two sons.

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Displaying 1 - 30 of 1,222 reviews
Profile Image for Suzanne.
484 reviews1 follower
May 18, 2008
Read this in 1991 just after it first came out. I couldn't put it down. If you don't understand the financial pages of newspapers and the terms they use, this is an easy way to learn about acquisitions, hostile takeovers, liquidity, assets, etc. Perhaps a bit dated now, but the author (a financial journalist) describes what happened here in the States in the 80's, a time when small businesses (and huge ones like RJR Reynolds) were bought out, sometimes just for the land they were built upon. The businesses were cannibilized and then closed after the maximum in profit was obtained. There was no reinvestment in the future. Job losses were viewed as part of business. Profit was their "religion".
Strangely it reminds me of my birdfeeders. I fill them daily with solid nutritious feed and enjoy the families of birds who rely on my stewardship in keeping that feeder fed, especially in winter. Then the grackles (crow-like birds) arrive in mass and devour the food in the feeders. Bird-lovers will understand this analogy. One will see a dozen of these ugly birds gorging themselves, spitting out seeds they don't like and often knocking the feeder from its perch. Corporate raiders are like grackles. How does one prevent it? I guess the secret is filling the feeders with a mixture of seed they don't like...
Moral of the story...if you build a company up from nothing and allow it to be publicly traded on the stock market, you are at risk for a grackle attack. Make sure you watch your feeders.
Profile Image for Rebecca.
1,215 reviews110 followers
October 15, 2011
I try to rate books based on how well they achieve their own objectives, and I think this one nails its goals perfectly. Corporate finance is labyrinthian by nature--to understand what actually happened in any given deal requires being able to track the money, the legal manuverings, and the easily ignored but incredibly critical personal relationships. (When I was a child, I thought that business deals were made based off of what was most profitable for the company. It turns out in real life, far more important factors are who plays golf with who and who is still pissed about not getting onto the board of some third company two years ago.) Barbarians at the Gate involves hundreds of people, with literally dozens of main characters (helpfully listed out by firm in the front of the book, a list you will return to again and again). They interviewed almost all of them personally, and include critical backstory for everyone involved, along with corporate histories, notes on legal ramifications, explanations of obscure financial procedures, and an overview of the history of the financial industry in general. Every bit of it is important.

That's not to say I enjoyed all of it, but my discomfort was never boredom. More just that I've been in enough meetings and contract negotiations to watch quite a lot of similar decisions being made, and some of this was close enough to home to raise my blood pressure by proxy.

The sheer hubris of some of these people is shocking. The CEO effectively kicks over this hornet's nest because he's bored and anxious about personal problems, and likes to stir things up for the sake of change. His stated reason for starting the LBO is incredibly weak--he's concerned about the stock price and thinks they're undervalued. He says he did it for the stockholders. (The company's stable at the moment and raking in money, which can be either plowed back in to make the company stronger or handed out dividends. As far as I can tell, doing short-sighted things to raise your stock price only benefits your stockholders if they then sell your stock. At which point, they stop becoming your stockholders. Now you have new stockholders, who own artificially inflated stock whose price cannot be sustained, who you have screwed from the very beginning. Honestly, I think trying to raise stock price "for the stockholders" is an asinine policy. The only way that raising the price will continue to benefit your stockholders is if you've done so by actually making your company more valuable--inventing new products, finding new markets, and investing in long term stability. Blowing it up via financial tricks does you no good in the long run--which (spoilers!) is exactly what happens here.)

But he's not the only one. The board have their own egos (and financial investments) to protect. Each of the bidding firms cannot afford to lose out on the biggest deal ever, but almost no one factors in their respective desperations, which leads to a spiral of increasing hysteria as each party is surprised when someone else trumps them.There are mysterious leaks to the press, back channel betrayals, ranting Cassandras, and a mad sprint through Manhattan when a traffic jam delays a critical bid. It's completely absorbing and a little sickening at the same time.

This is a sausage-making book, as in, the more you know about what goes into high finance, the more horrified you're likely to be. As I'd mentioned, I've been exposed to some similar shenanigans, albeit on a much smaller scale, but it rings true. This is real-life high drama, featuring political manuverings that make and break fortunes as well as destroy jobs and lives across the country. The fallout still influences the behavior of CEOs and investment banks today. One might expect a detailed financial history to be boring, but that ignores the fact that the driving force behind any such deal is the relationships between the people, in all their brilliant, vain, loyal, treacherous, ambitious, flawed glory.
Profile Image for Arminius.
206 reviews50 followers
July 31, 2015
Barbarians at the Gates is a fascinating tale about the rise and fall of food giant Nabisco. Ross Johnson was head of Nabisco’s rival Standard Brands. They show how he used his affable personality and his ability to befriend coworkers, bosses and over-seeing boards to propel himself to Standard’s CEO while winning a battle against his superior and getting his superior ousted. Nabisco had gained competition from Frito Lay and Proctor Gamble so it looked to expand, buy merging with Standard Brands. Johnson negotiated the merger as head of Standard Brands with Nabisco. He agreed to let Nabisco CEO Bob Schaeberle head the combined companies while he remained second in command. He charmed Schaeberle and Nabisco board members and he moved Standard Brand employees into key positions. He had all night parties with his coworkers drinking to excess yet still able to plan out business strategies. He palled around with sports celebrities like Frank Gifford and insisted on the use of corporate jets to do so.

Nabisco did well, under a never- sit-still ran business, under his guidance. He made business acquisitions and sold others. He then succeeded Schaeberle when Schaeberle retired.

Then the book looked at RJ Reynolds Tobacco. It is a little confusing that the book made a sudden shift to detailing the history of Reynolds but you figure out that this company was to be the next venture Mr. Johnson got involved with. Reynolds was huge company during the 1970’s when cigarettes were so popular. Their big winner was the brand Camel. But to Reynolds consternation, the Surgeon General announced that cigarette smoke caused cancer. So Reynolds anticipated a decline in sales and looked to diversify into other areas. Nabisco and Johnson were ready to accept their vision.

So they combine. Ross Johnson, as head of Nabisco, agreed to let RJ Reynolds chief Tylee Wilson head the combined company and be his second in command. Ross Johnson is so coy though. He charmed Wilson and RJR Nabisco’s newly created board of directors to get almost everything he wanted including RJR Nabisco’s fleet of airplanes.
Wilson fell out of favor with the board for not informing the board of his secret project to create a smokeless cigarette. As a result the board dumped him and replaced him with Ross Johnson.

Ross Johnson as head of RJR Nabisco continued his shake up ways. He enjoyed his lavish lifestyle as RJR N stock price dropped from the mid $70 per share to the 50’s.

This kind of action did not bother other CEO’s as long as they were making a profit. RJR were certainly making huge profits but it was a good reason, in Johnson's eyes, to shake things up again.

He left hints that he was looking at another merger to boost stock prices. Leveraged buy out (LBO) companies became interested. Johnson, enticed by the riches he can obtain through an LBO encourages a friend at American Express owned Shearson Lehmen to buy out RJR Nabisco.

Wall Street vultures found out and pursued Johnson with LBO buyout offers. What I got from the book is that it wasn’t Shearson Lehman who was going to get to enrich Johnson and themselves with an LBO but it was going to be between LBO orchestrator giants Kravis/ Roberts and Forstmann Little. Adding to the drama was Ted Forstmann’s extreme dislike of Kravis's chief Henry Kravis.

To my surprise, Forstmann Little drops out. Then out of nowhere a down trotting company named First Boston comes up with a soon expiring tax loophole to orchestrate an LBO takeover which amounted to over 3 million dollars in additional profit.

It became a game of Shearson, Kravis and First Boston all in for the play. After weeks of haggling First Boston’s plan did not sit well with the RJR Nabisco board but managed to drive up the cost of the buy-out to $109 per stock share. Kravis had the most reliable financing plan so they won the bid despite Shearson’s $112 bid.

Ross Johnson got the axe when Kravis took over but he left with his stated goal of raising the stock price. In fact, it doubled. However, he left a great company in shambles and received a $53 million dollar separation package for his work.
Profile Image for Nick Black.
Author 2 books801 followers
January 3, 2013
went up to the parents' house over christmas, and found this in the garage, and was like "what? the parents don't read books" and, worried it might be mistaken for a delicious meal, grabbed it. there's some purple fucking prose in this book! Here's how not to write compelling narrative, kids:

The atmosphere at Tuesday morning's breakfast between Cohen and Kravis was no worse than that inside any commercial meat locker.

It's about as bad as All the President's Men, but the material kinda saves the effort. What personalities! What bling! What social-climbing wives! Fair Atlanta, described as the glamorous Empire City of the South that she is! Cigarettes! South-vs-North struggle! I swear solemnly that people will one day reminisce of me also:

....gracious in defeat. Arriving at Nine West, the first thing he did was open the bar.

I'd never considered "open the bar" as a verbal phrase, but I love it. But yeah, this effort was basically two frat guys jabbering over a typewriter, cigars ashing freely, shirts flying open to reveal great Scotch-built bellies, good old-fashioned white male fun. An absolutely untrustworthy book, unreferenced and unknowable details aren't so much papered-over as gleefully thrust upon the reader. Pillow talk between married couples is quoted at dialogue's length. Inner thoughts of unnamed looker-ons are detailed, and presented as fact. Are we to gulp down this tissue of horse shit? Are we to take these glib lies like a greased and nameless asshole? What wondrous Fairiaes provided these unfacts? Who facilitates these crude and stumbling thrusts of explicative derring-do?

In fact, this book was terrible. The story is crazy, though, and well worth reading. More than anything, it has made clear something I've long suspected: to make the real money, you've long had to to be a lawyer or banker, not because these require any particular skill but because they're closest to the money, and to the rules regarding that money (through the economic era, anyway. You used to need serfs. Serfs are no longer allowed; like the first Internet Boom, I was born a few years too late to cash in. Though, really, a King is surely just the Archlawyer of the Realm?). Thankfully, through the dual magics of high-speed trading and venture capital, computer scientists are finally getting in on this gravy train as well.


http://www.youtube.com/watch?v=56u6g0...

I hope the authors are penniless and being flayed by some Kafkan Commandant, but somehow doubt it. I don't want to live on this planet anymore.
Profile Image for Tammy.
81 reviews
November 25, 2008
11-07-08
This tsunami of details in this story of the leveraged buy-out of RJR Nabisco would be mind-numbing if it were not for the sharp anger at the incessant and insatiable greed it highlights.

One feels an eerie sense of déjà vu reading this book. The RJR Nabisco takeover battle was fought in 1988, but the unmitigated (and unregulated) greed on the part of Wall Street seems to only have changed in form, not in magnitude. It borders (then and now) on the obscene.

This book is not for the faint of heart – the reader is led step-by-step, moment-by-moment through the byzantine world of leveraged buy outs. Keeping track of names, financial institutions, and esoteric details regarding the “Alice in Wonderland” nature of the financial world requires constant vigilance. This book is for the dedicated, persistent, or patient reader. Nevertheless, the basic characters in this drama are interesting, maddening, and full of hubris. Those with an economics/business background will likely find this a telling and important read.
Profile Image for RJ - Slayer of Trolls.
930 reviews198 followers
October 13, 2020
"The Roaring Eighties were a new gilded age, where winning was celebrated at all costs."

The 1980s were the era of the BSDs, and they were also the era of the LBOs or Leveraged Buyouts, which is simply the acquisition of a company using borrowed money. With Drexel Burnham Lambert and its felonious steward Michael Milken pumping billions of dollars of junk bonds into the financial system, the explosive result saw RJR Nabisco acquired for over $30 Billion in a media circus that stretched out for weeks and transformed RJR's Ross Johnson and KKR's Henry Kravis into the materialistic greed pin-up boys of a newly deregulated Wall Street. Burroughs and Helyar, both writing at the time for the Wall Street Journal, documented the entire affair in lurid detail and supplemented their reporting with lengthy interviews with the participants as the dust was still settling. The result is not only a detailed account of a groundbreaking transaction but also a snapshot of the unfettered Wall Street of the times that was shocking 30 years ago but far more pedestrian today.
Profile Image for Rohit Enghakat.
243 reviews66 followers
October 9, 2020
Generally, I finish a book once I start reading. But this one belied my hopes. After 200 pages I stopped. I think this is the third book left unfinished this year.

It is a slow burn and utterly boring. It took almost a month to finish off the 200 pages. Too many cooks spoil the broth. Similarly, too many characters flitting in and out of pages. Lost track of the name of executives and lawyers in the book and ultimately was getting confused who was who. Finally, I just stopped reading.
Profile Image for ALLEN.
553 reviews135 followers
November 3, 2020
If the business of America is business, then few books said as much about American business -- and America -- than this 1989 bestseller about the chain of mergers and acquisitions that came to pass when RJR merged with Nabisco and the big-money boys with their Bvlgari watches and Hermes ties got involved.

One decade of greed led to another, and we are still working through the consequences of that. This well-researched and very well written book by business journalists Bryan Burroughs and John Helyar is indeed "an enduring masterpiece of investigative journalism," to use Amazon's words, and a love-hate letter to the mixed joys of American big business. It very much bears reading, even today. A 2008 Epilog adds another 40 pages to the story.


from the book:
If not for the RJ Reynolds Tobacco Company, the modest skyline of Winston-Salem, North Carolina, would not exist at all. For years the business was headquartered in a twenty-two story stone building that, when completed in 1929, was considered such an architectural gem it was decided to take the design to New York and execute it on a grander scale: the Empire State Building . . . If not for Reynolds, Winston-Salem would be like a lot of other little Southern cities of 140,000 souls. Except for the demiskyscrapers, the downtown is largely scruffy -- a place of tired old stores and tired old people. Reynolds makes Winston-Salem different. (p. 40)
Profile Image for Nicola James.
65 reviews64 followers
October 9, 2023
An in-depth look at the innately ugly world of the leveraged buyout, and how it seriously screwed up RJR Nabisco when their senior management made some terrible missteps. Well written and expertly researched.
Profile Image for Sean Sullivan.
129 reviews79 followers
July 19, 2007
If you haven’t noticed, I am a connoisseur of the business bestseller. I read ‘em all, and this one is among the best. This, Den of Thieves and the Informant are as good as these books get. Here we got conniving and scheming on a massive scale. Extremely unlikable rich assholes brought low by equally unsavory, but way smarter rich people.

It’s the story of an attempt to take RJR Nabisco private, and then a series of take over attempts that were instigated by the original privatization plan. Johnson, the CEO of RJR comes off as a dick, and not very smart at all. He’s like a frat boy who makes by glad handing people and buying rounds of drinks – i.e. the kind of rich guy I hate the most. Kravis, of legendary take over firm KKR, comes off like a financier god. Brilliant, pushy, and beyond you puny human morals. Guess who gets the company in the end.
Profile Image for Amar Pai.
960 reviews101 followers
August 3, 2016
This book is weird. It's written like a taut spy-thriller, and superficially it's a "page-turner"-- everything on the page seemed very exciting and I kept wanting to read it. But the stuff being written about-- the tale of some investment bankers fighting over who gets to buy RJR Nabisco-- is boring beyond belief. Lots of arcana about leveraged buy outs, endless paragraph-long sketches of interchangeable middle-aged white guys engaged in a financial dick swinging contest, pages upon pages devoted to what this lawyer said to that lawyer... who cares. And yet I more or less read it to the end! It's a conundrum.

Did this get made into a movie? I guess I'd watch that.
Profile Image for Brahm.
499 reviews67 followers
January 20, 2022
Superbly well-written "biz saga" about a massive corporate takeover during the Roaring Eighties of Wall Street, if you're into that sort of thing.

Bryan Burrough is a great author. I recently read Dragonfly: NASA and the Crisis Aboard Mir and loved it, and coincidently found this present book referenced in another book I'm reading (Factory Physics). I'd check out more of his books in the future.

At 520 pages this was a bit long, some of the "characters" could have been trimmed for a more streamlined reading experience.
Profile Image for Amy David.
386 reviews2 followers
February 18, 2019
If you're at all interested in how investment banking and Wall Street make money by doing nothing of value to society, this is a great read. It's long, but the authors have done a good job of breaking things down and making the narrative suspenseful to the end, even with zero likable characters.

I just wish the latest edition came with an appendix on how to build a guillotine.

135 reviews
March 28, 2016
This is an interesting story but WAY too many details. The book is way too long to read.
Profile Image for Kurtbg.
692 reviews16 followers
December 2, 2015
Corporations back in the day were established to create products and provide services and have certain laws and rights applied to the organization and its employees. Not so starting in the late eighties.

This book chronicles a selling-off of a major corporation in the late nineties: RJR Nabisco.

As the role of CEO has become more prominent the greed and ego of those in positions have risen. At some point a CEO wanted a bigger fiefdom so they thought it would be smart to combine a food company with a tobacco company. Then that guy was forced out by his number 2 guy, Ross Johnson, who came from Nabisco. He increased contracts with his director companies, and showered the with perks previously denied executives due to the conservative and folksy run RJ Reynolds (RJR.) The directors loved it.

Who didn't love it was wall st. No matter the value of the combined company and the profits of tobacco, the residue of a tobacco company left a bad taste in investors mouths. Johnson couldn't do anything to move the stock price up. He did have options: issue separate stock for each division (food/tobacco), split the company, swallow another company.

Instead he chose to sell RJR Nabisco - to himself.
What? You're thinking? how can this be done? Well, the management group gets some investors together and banks to provide money via cash and bonds and make an offer to the company. How can this be legal? Isn't the CEO getting paid to do what's for the best interest of the company and shareholders? Ha ha! You just don't understand the world of business if you think that.

Ross Johnson knew it. This book describes Johnson providing zero value to the company as CEO. He had no trouble spending and giving himself perks. Winston-Salem was the corporate HQ, but too boring for Johnson. He moved it to Atlanta. Before, limos were seen as an extravagance to the company. Johnson buys jets and has a hangar built. He sponsors celebrity events and name drops. In short, he's living high off of other people's money. He's just one of many executives who turn corporations into feeding troughs of greed and ego.

He does do one thing. He initiates product development on a smokeless cigarette named Premier... oh, he keeps it a secret from the board who only find out about it once 68 million had been pumped into it. It ultimately fails.

So Ross wants more, because just being head of a corporation others built isn't enough. He goes the leveraged buy out route. What's that?
It's where you buy a company with, you guessed it, other people's money. You get financial backing, make a bid, and if you win, you create three things: debt, fees, ownership. Wall street loves the fees. You get them no matter what. Gotta love it. The debt? Well, you tackle the debt by selling off portions of the company you bought. Yup, that's right. It's like the real estate trick of buying property, and then immediately selling it to someone else for more money. You never have to pay, but you get a lovely cash infusion. So, once the debt is paid down, the remainder is restructured, profits from the company pay it down, and you tap into the benefits of owning a multi-million company.

let's no forget the fees: 400 million in billable fees for the transaction. Cha-ching.

Imagine someone buying Disney. They just need initial financial backing to cover the 85 billion, or so, bid. Then sell off pieces to pay it down and off. Plenty of pieces there. Crazy, huh?

The rest of the book covers the different bidding parties and what went on up to and during the bid process (more ego and greed.)

What does this have to do with improving a company, product, or services? Ha ha! actually nothing. It's just business. Imagine something tangible, like a company creating a good. It has value based on market (need/desire) and the economy. Now, imagine another layer around that which has nothing whatsoever to do with company or really cares about it. That layer is wall street which is looking to extract money from the valued center companies. Business for the sake of business.

RJR Nabisco did not need to be sold. It wasn't in trouble. It was profitable. Johnson just wanted more.

How does it provide a benefit of the overall economy to allow this to happen? I couldn't say. LBO's died down after that, but something else always takes it place and does damage before it's prevented. During that time you also had junk bond abuse and savings and loan scandal (kinda a precursor to Enron.) After that it was Enron shaking down California by getting energy to be treated like a market and then limited demand to jack up price, then it was the real estate swindle which created an economic time bomb with predatory lending and ballooning mortgages.

What's next? I think it might center around this thought:
If it's too big to fail, it's too big.

(yeah, I know we already had this a few times, but I don't think we've seen the last of it)
Profile Image for Jenna Leone.
130 reviews90 followers
July 30, 2022
An in-depth retelling of the contentious LBO (leveraged buyout) of RJR Nabisco. Given the subject matter, this could've been really dry and boring, but it was written in a way that kept the tension high throughout the story and made me feel like there were real stakes involved (even though all of this stuff happened decades ago). Pretty good read!
26 reviews
February 16, 2021
Some genius invented the Oreo. We're just living off the inheritance.
43 reviews11 followers
February 17, 2022
I used to think that there was no legitimate reason for investment banks to make analysts work such long hours, that it happened because of a culture of hazing and because they have clients who are used to feeling important so you’d better get them an answer to their 5 PM question in the form of a next-day-at-8-AM slide deck. Why can’t everyone just chill out and let the analysts take an extra day? After reading this book, I now recognize that there can occasionally be legitimate reasons: the RJR Nabisco deal was competitive! There were real deadlines and real competitive advantages to moving before a competitor could! There’s a memorable scene with lawyers rushing in a taxi to deliver a document before 5 PM, getting the final numbers to pencil in over the phone during their journey.

Barbarians at the Gate is such a great story, even for readers not in the financial industry. The characters sure are real characters. I loved Ted Forstmann, who goes on the same 30-minute tirade each time anyone else mentions junk bonds in his presence and is so self-absorbed that he doesn’t notice everyone else leaving the conference room during his rant. The stakes are high: money, lifestyle, reputation, the future of one’s business, league tables. There’s strategic maneuvering, lying, and shenanigans. There’s greed and hubris. There’s a firm that is ready to scrap a deal with at least tens of millions of dollars in fees for them because their name “would go on the right side, not the left side, of of a tombstone advertisement buried among the stock tables at the back of The Wall Street Journal and The New York Times.”

That said, there should have been, like, two additional pages explaining the finance. As the token financial-industry professional in my book club, I had to fill in some gaps when my friends had questions.

It’s so well-researched. The authors interviewed ~everyone involved in the deal. The occasional footnotes highlighting points of uncertainty, like “Cohen recalls having taken a less combative stance; this version is largely Beattie’s recollection,” highlight how certain they are about everything else; I wish more authors wrote this way. During the fact-checking process, they found out that one investment banker had made up stories about being a “decorated Vietnam jungle fighter,” and after they published a WSJ story about it, he resigned.

Finally, I got pretty mad about “corporate greed,” of all things. Not “corporate greed” in the Elizabeth Warren sense of corporations trying to increase profits for their shareholders, but “corporate greed” in the sense that the executives were running the company for their own benefit at the expense of shareholders. It’s one thing to come out of an arms-length negotiation with an enormous pay package, but it’s another to try to compensate yourself in ways the board doesn’t know about or to co-opt board members with perks or bribes. Maybe I’m naïve. I came away thinking that management buyouts are sketchy and have serious principal-agent problems. “This company is mismanaged by people running it for their own benefit and not that of shareholders, and it’s trading below its potential value, so I should buy it, fix it up and run it better and reward myself with the newly-created value” is a good story for why you might want to acquire a company, but not when the (mis)managers are the people trying to do the takeover!!! Why weren’t they doing their jobs and running it better in the first place?!
Profile Image for AJ Ridley.
242 reviews25 followers
May 10, 2023
An engaging look into the trend of leveraged buy-outs and how the executives of RJR Nabisco screwed up.
Profile Image for Anita.
124 reviews2 followers
December 11, 2009

Detailed - and downright shocking - display of the egos and attitudes of hundreds of real people involved in the biggest private equity buyout of its day (and until relatively recent days). Describes far too many people to follow and too much detail, but the sheer magnitude of greed, excess and penis envy is amazing.



The DVD of the same title gives the abridged version of the story. It's quite hard to follow the story without knowing the background from the book. DVD also emphasizes Linda Robinson's character and her role compared to the book.



Profile Image for Mehrsa.
2,235 reviews3,634 followers
August 5, 2020
I finally re-read this one after like a decade and honestly, this whole hostile takeover seems so quaint compared to the modern day LBOs. It's just that it was so new then and CEOs got so emotional about it.
23 reviews
August 30, 2023
The book tells an interesting story about RJR Nabisco LBO - the largest deal of The Roaring 80s - representative of the culture that shaped the finance industry worldwide.

The 80s were a watershed moment in the finance industry that shifted the role of the investment banks - from being hired as a help to becoming independent players pursuing their own interests. In the turbulent 80s M&A became an almost guaranteed source of money on Wall Street as regardless of the result, the deals produced generous fees for the parties involved in advising, lending money, selling, and buying. The bankers had “no allegiances, period except to their firms and themselves.” M&A became the battlefield of the egos and personalities often detached from the idea of value creation for the shareholders. The greed and personal vendetta interfered with the company’s internal affairs and impacted the outcome of the deals. This period also created a new generation of millionaires. Surprisingly, many of them rose from the lowest ranks - Kravis who worked in the mailroom, and Johnson who was a salesman in a medium-sized Canadian firm.

The corporate world described in the book is also shocking. Overpaid executives, excessive spending lacking taste and purpose, corporate caste system benefitting the aristocracy balanced only by the fear of negative publicity or regulation tightening from Washington. The book sheds light on the controversy of internal politics, the tension between the management and the board, and the interest in “financial R&D schemes” that have nothing to do with operational performance.

For someone who works in the finance industry, the book provides an exciting history of nowadays widespread LBO. Initially, LBO was created to release the old founders from the burden of running the company and cash out before death. In the 80s this type of transaction gradually gained traction. The book explains how an LBO is seen from the company’s perspective equating it with belt-tightening and aggressive cost-cutting to ensure timely debt repayment. The authors compare an LBO with buying a used car which requires inspection and understanding of what can be cut. It was interesting to see the underlying process of decision-making for such transactions and imagine the tension emerging in such a huge auction. The impact of RJR Nabisco is also significant, at least in the decade preceding the financial crisis. “Everybody on Wall Street looks and acts very differently when they look at deals. It's made everyone a little bit more conservative, calmed them down, and took some of the fight out of them. No one's got the appetite after RJR.”

Overall, despite the book's succinctness and lack of the vibrancy of the investigative literature, it is an enriching story that immerses the reader in the world of toxic Wall Street culture and lets one question its past and future.
Profile Image for Tomas Krakauskas.
29 reviews20 followers
April 3, 2022
Great story about the largest leveraged buyout (LBO) in a history at that time. Its a detailed private equity playbook description wrapped in intriguing story of greed and fierce competition. A great summary was done by the protagonist Ross Johson about main rules of Wall street, which you see through the story 1. Never pay in cash 2. Neber tell the truth 3. Never play by the rules
Profile Image for Bizzy.
398 reviews
June 10, 2023
3.5/5 stars. Reading this reminded me a lot of Too Big to Fail, because both books describe seemingly every conversation between all of the (many, many) players in this story, focusing on little details at the expense of greater context.

There are some good insights here about the LBO industry in the 80s, and the authors certainly left a lot of space for reading between the lines about how LBOs like this one accrued absolutely no benefit to anyone except a handful of executives and the army of investment bankers and lawyers employed to carry out the deal. There’s also enough here to help get a sense of why the LBO fad faded, even though the book was published before that occurred. But I think more could have been said explicitly about what happened at RJR Nabisco and its various subsidiaries after the buyout occurred, and leaving out those details makes it hard to assess the true impact of the deal. The authors clearly didn’t want to express an opinion one way or the other about whether it was good or bad, which is fine, but focusing entirely on the company’s executives and the tiny details of the LBO battle is still expressing an opinion, just indirectly. The fallout of the deal is treated as inconsequential to the story—just as the major players saw it. They would argue for their actions to be judged in exactly this context, and granting that wish is doing them a favor.

One of the things I most enjoyed about this book was that it’s an 80s time capsule. Every office and conference room is full of number two pencils, everyone’s always waiting around for “computer runs,” and the only way to deliver documents from one side of NYC to the other is by taking a cab. And so many scenes take place in executive dining rooms! The authors refer to myriad companies and objects without explanation because they would have been household names in 1989, the year this was published, leaving the modern reader clueless. This isn’t a knock on the authors at all, just an observation on how we can never predict what will fade into obscurity and what won’t.

This book also reminded me how grateful I am that indoor smoking bans were passed when I was still young, because ew. And I’m impressed with how deftly the authors wrote around the very obvious cocaine use by Johnson and others who were constantly up all night partying and then going to work the next day with no problems. Sure!

Finally, I can’t end this review without sharing this quote:

After dinner a beaming Linda Robinson brought out her husband’s birthday cake, which she had designed herself. A carrot cake with white frosting, it was decked with Oreos; graham crackers; and honey, cinnamon, and chocolate Teddy Grahams, Nabisco’s popular new cookie. But the pièce de résistance was the candles, or what at first glance appeared to be candles. On closer inspection one could see they were actually Winston and Salem cigarettes, each merrily lit atop the cake and wafting curls of smoke.


“Her husband” in this quote is the chairman of American Express. The 80s were truly a time.
Profile Image for Shreedhar Manek.
127 reviews80 followers
August 3, 2022
Barbarians at the Gate—an undeniable classic in finance—takes the reader from start to end of a leveraged buyout (LBO) which is a fancy way of saying buying out a company after taking a loan against the company's assets. (What Elon Musk was going to do with Twitter.)

The entire concept of an LBO is mind boggling and might take a few minutes to grasp. In theory, someone with $0 can end up owning a multi billion dollar company. Here's how it works.

1. Identify a company with a high amount of free cash flow (lot of cash coming in with nothing to do with it).
2. Go to a bank. Tell them about this company and convince them that this might be a good company to lay your hands on.
3. Go to the company and make them an offer they cannot refuse.
4. Buy company with money loaned out from the bank. Pay the loan back from the cash that the company that you now own generates. Reduce costs by firing employees and/or selling off assets. $$$$
5. In case the newly acquired company is mismanaged and you cannot pay back the loan—no problem! The bank takes over the company and does whatever it wants with it. You start with nothing and end up with nothing. No harm done.

This is, obviously, a simplified version of events. But in essence this how LBOs work. In reality, if you go to a bank and ask for a loan to buy a multi billion dollar company, they wouldn't really oblige. Not unless you put up a few billion dollars yourself (as Musk did). But you get the gist of how it works.

Barbarians is about a famous LBO back in the 80s when LBOs were quite the rage in corporate America. And why wouldn't they be? Almost all stakeholders apart from the employees saw money. And this particular famous LBO? One of America's largest companies at the time (in the top 20 I think?) called RJR Nabisco. They owned the Oreo brand (yes, the cookie) while their moneymaker was their cigarettes (Camels).

The book is action-packed from start to finish. There is no dull moment. The author takes us through the littlest of details, after what would probably have been hundreds or maybe even thousands of hours of interviews. The detail is impeccable. The writing is simple enough for a finance layman to pick up.

Overall the book goes to show in super depth the extent to which things work on whims and fancies of top level executives. If you think there's a full and proper thought process behind every move some bigshot suit takes in his tower office.. brace for a surprise. Because while there is a facade of decorum, even the largest of decisions often come down to feelings, emotion, networks, egos and, most importantly, greed.
Profile Image for Simon Lau.
1 review1 follower
December 22, 2014
This book was recommended to me by a business school professor who referred to it as "the best business book on private equity." As someone who studied finance at NYU and a lifelong student of history, I was intrigued.

The book turned out to be a wonderful read. I learned a tremendous deal about private equity, the mid-to-late century evolution of finance on Wall Street, and the important role of corporate governance in business. Some of these points were not discussed on an academic level (e.g. evolution of finance and corporate governance), but this book provided great case examples of topics I had learned in school. I would definitely recommend to others interested in business history and finance!
187 reviews3 followers
September 25, 2017
LBO 역사에 한 획을 그었던 RJR내비스코의 기업 인수 건을 두고 벌어졌던 6주 간의 이야기를 논픽션으로 구성한 책이다. 정말 재미있게 읽었다. 소설보다 흥미진진하다. 약간의 금융지식과 금융에 대한 호기심이 있다면 더욱 재미있을 것 같다. 80년대 호황기의 탐욕의 상징같은 인물로 그려지는 CEO 로스 존슨과 이 건을 계기로 인수합병 분야에서 자신들의 위치를 올리고 싶어하는 시어슨, 살로몬 진영, 그리고 인수합병의 최강자인 KKR과 80년대의 상징적인 인물인 정크본드의 지배자 마이클 밀켄의 드렉셀 번햄 진영, 마지막으로 바세르스타인이라는 핵심 인물을 잃고 휘청이면서 인수합병 분야의 지위를 잃어가던 퍼스트보스턴의 지휘자인 마허와 그의 부하들 진영, 이렇게 여러 진영이 뒤엉키면서 이해관계가 얽히고 부딪히는 것이 정말 재미있게 그려진다. PEF, LBO, 인수합병에 대해서 알고 싶은 사람이라면 반드시 읽어봐야할 고전이라고 생각한다.
Profile Image for Mico Go.
106 reviews19 followers
March 18, 2023
Really gripping, and a fantastic deep-dive into the story that may have well shaped dealmaking and M&As today. This was also a fantastic and detailed account into the origins of PE, KKR, IB and the reputation that precedes the overall finance-bro industry.

Ross Johnson is a damn stud, and Henry Kravis is a cold-blooded killer.
Profile Image for Nathan Wittmann.
44 reviews1 follower
Read
March 13, 2022
The ultimate swinging-dick contest. If your mind wasn’t already made up that the fate of the world’s finances was, and is, run by a cabal of middle-aged white male egoists, go ahead and try this monster on for size. If you’re looking for a nonfiction chronicle wherein nary a single likeable character dwells, written with verve and a steely eye, look no further. It’s always refreshing picking up a business history text and disproving the fantasy that the world has left its tribal roots and a sense of brotherhood permeates all.

Postscript: Oreos are still damn tasty, Secondhand smoke less so, and nothing solicits a modicum of sympathy like hearing a bunch of accidental, geriatric millionaires drone on about much of a bummer it is that their cigarette-fueled town’s glory days have passed into oblivion. Oh, what a world, what a world.
Profile Image for Anna Hicks.
62 reviews
October 6, 2022
Qualifier: 5/5 stars for the current phase of books that I’m in - “schadenfreude corporate history”

My goodness - what a time to be alive! It’s the mid 1990’s. You look good. You smell good. You work 80 hours a week without breaking a sweat.

Corporate side - life is good! Company car! Company jet! Company house! Expense accounts!

External advisory - You just want to be part of the deal. Does the deal make sense? LITERALLY NO ONE CARES. A deal is a deal is a deal. Deals = good and No Deals = bad.

That’s the book.

I won’t spoil it by telling you who wins the bidding war… but I will spoil it by revealing my shocked position at the really, marginally lucrative prize for winning it. As in… it was a one liner in the book…”it was a marginally profitable deal”. And these morons worked 80 hours a week FOR MONTHS to get it done.

Wild times, man.
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