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Barbarians at the Gate: The Untold Story of the Fall of Wall Street's Giants

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10 min / Published
By Renew

Chapter 1:Summary of the Barbarians At The Gate

Barbarians At The Gate by Bryan Burrough is a detailed account of the leveraged buyout (LBO) of RJR Nabisco, one of the largest and most controversial business deals in American history. The book explores the power struggles, greed, and corporate intrigue that surrounded the takeover bid.

The story begins in the 1980s when RJR Nabisco, a powerhouse conglomerate with popular brands like Nabisco Cookies and Camel cigarettes, was looking for a buyer. Burrough delves into the personal backgrounds of the key players in the deal, including Ross Johnson, the CEO of RJR Nabisco, and Henry Kravis, one of the co-founders of private equity firm Kohlberg Kravis Roberts (KKR).

The book describes how Johnson initially concocted a plan to take RJR Nabisco private through an LBO, which involves buying a company with a substantial amount of borrowed money, using the company's assets as collateral. Johnson gathered support from several Wall Street investment banks, including Salomon Brothers, but faced opposition from KKR, who also sought to acquire the company.

Burrough gives readers an inside look at the intense negotiations, secret backroom dealings, and aggressive tactics employed by Johnson and Kravis to outbid each other. The battle for RJR Nabisco escalated into a multi-billion-dollar bidding war, captivating the media and the public.

Through extensive research and interviews with the key players involved, Burrough offers insights into the motivations, strategies, and personal rivalries that shaped the outcome of the deal. He also delves into the controversial financial practices and ethical questions raised by the LBO process, as well as the impact it had on the company and its employees.

Barbarians At The Gate is a gripping narrative that paints a vivid picture of the excessive and cutthroat world of corporate takeovers. It provides readers with a nuanced understanding of the forces at play and the consequences of such high-stakes financial maneuvers.

Chapter 2:the meaning of the Barbarians At The Gate

"Barbarians At The Gate" is a book written by Bryan Burrough, along with John Helyar, and it was published in 1990. The book tells the story of the leveraged buyout (LBO) of RJR Nabisco, one of the largest tobacco and food conglomerates in the United States at the time.

The title, "Barbarians At The Gate," refers to the aggressive and ruthless tactics employed by various investment firms and corporate raiders in their pursuit of acquiring RJR Nabisco. These firms were dubbed as "barbarians" because of their hostile takeover strategies and the notion that they were attacking a fortress-like company.

The book provides a detailed account of the events surrounding the bidding war that took place in 1988 between several prominent financial players, including private equity firm Kohlberg Kravis Roberts & Co. (KKR), and individuals like Ross Johnson, the CEO of RJR Nabisco. It delves into the personalities, motivations, and strategies of the key players involved.

The story explores the world of high-stakes corporate finance, showcasing the complexities, greed, and power struggles that come with such deals. It reveals the intense competition, the frenzied pursuit of profits, and the lengths to which individuals and firms will go to secure a successful takeover.

Furthermore, "Barbarians At The Gate" provides insights into the excesses of the 1980s Wall Street culture, where financial engineers and dealmakers were willing to leverage huge amounts of debt in order to acquire companies and generate significant returns. The book highlights how leveraged buyouts, which were prevalent during that time, could have vast implications for both the companies involved and the wider financial landscape.

In summary, "Barbarians At The Gate" is a narrative non-fiction book that tells the gripping story of the RJR Nabisco takeover battle, offering an inside look at the dynamics of corporate finance, the personalities behind the scenes, and the sometimes morally ambiguous practices employed in the pursuit of wealth and control.

Chapter 3:the Barbarians At The Gate chapters

Chapter 1: The Beginning of the End

This chapter introduces the key players involved in the leveraged buyout (LBO) of RJR Nabisco. It explains how Ross Johnson, the CEO of RJR Nabisco, and Henry Kravis, of the investment firm Kohlberg Kravis Roberts & Co. (KKR), became rivals competing for the control of the company.

Chapter 2: Rebuilding a Tobacco Giant

This chapter provides background information on RJR Nabisco, its history, and its rise to become a major force in the tobacco industry. It also explores how Ross Johnson transformed the company from a failing conglomerate into a successful tobacco giant.

Chapter 3: A Gilded Time

The chapter delves into the corporate culture at RJR Nabisco during the 1980s, characterized by excessive spending, extravagant lifestyles, and a cutthroat environment. It also discusses the excesses and indulgences of the era, including lavish executive compensation packages and luxurious corporate retreats.

Chapter 4: Ross Meets Shearson

This chapter details Ross Johnson's decision to sell the company and his search for a buyer. It explains how Johnson initiated talks with Shearson Lehman Hutton, a prominent investment bank, and the complexities involved in structuring a deal.

Chapter 5: Henry Kravis Arrives

Henry Kravis enters the scene as a rival bidder for RJR Nabisco. The chapter describes how Kravis and his firm, KKR, had previously made successful LBO deals and outlines his strategy for acquiring the company.

Chapter 6: Johnson Strikes Back

In this chapter, Johnson becomes determined to secure RJR Nabisco for himself and starts devising a plan to outbid Kravis. It outlines the countermeasures Johnson takes to block Kravis and maintain control of the company.

Chapter 7: The Proxy Fight

This chapter delves into the proxy fight between Johnson and Kravis that ensued to win shareholder support for their respective bids. It explores the tactics and strategies employed by both sides to influence the outcome.

Chapter 8: The Auction for RJR Nabisco

The chapter covers the climax of the narrative—the highly anticipated auction for RJR Nabisco. It provides a detailed account of the bidding process and the escalating offers made by Johnson, Kravis, and other potential buyers.

Chapter 9: The Final Days

This chapter recounts the final days of the bidding war and the emotions, tensions, and maneuvering of the key players involved. It shows how Johnson ultimately loses to Kravis and KKR in the battle for RJR Nabisco.

Chapter 10: Is Anyone Worth $25 Billion?

The aftermath of the deal and the implications it had on the wider financial and business world are explored in this chapter. It examines the criticisms and debates surrounding the inflated price paid for RJR Nabisco and the impact on the economy.

Chapter 11: Taking the Toll

This chapter examines the consequences of the LBO on the employees and stakeholders of RJR Nabisco. It discusses the extensive layoffs and cost-cutting measures implemented by KKR to make the deal financially viable.

Chapter 12: The Fading of the Heroes

The final chapter fast-forwards several years after the LBO to explore what happened to the key players involved. It delves into the reputational damage suffered by Johnson and Kravis and the mixed legacies they left behind after the RJR Nabisco deal.

Chapter 4: Quotes of the Barbarians At The Gate

1. "Greed is something that comes before goodness. It’s something that’s been deeply ingrained in the American psyche."

2. "One of the great things about capitalism is that it forgives a multitude of sins."

3. "Every time there's a cycle in the economy, in finance, in mergers and acquisitions, there's always a reckoning."

4. "Wall Street is a place where if the money is right, anything can happen."

5. "You never know who's going to be the hero in an era like this, because heroes are people who really risk everything."

6. "The whole financial world out here is built on the deal, on making a killing, on taking your money and your ego to the heights that can’t really be conceived by normal people."

7. "The saddest thing about the world we live in today is that people still believe there's some kind of nobility or honor in big business."

8. "Mergers are a little like marriages. They’re a way of reviving dormant franchises."

9. "In the end, some deals work and some don't. That's just the way it goes."

10. "When the numbers make sense, cold, hard logic should rule the day. But when they don’t, greed and egotism take over."

  • Management & Business
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A podcast by Renew
A good read, read good books
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