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Barbarians at the Gate

Bryan Burrough, John Helyar

596 Pages
2009-10-13

Barbarians at the Gate

The Fall of RJR Nabisco

Harper Collins

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โšก Free 3min Summary

"Barbarians at the Gate" - Summary

"Barbarians at the Gate" by Bryan Burrough and John Helyar is a riveting account of the largest corporate takeover in Wall Street history. The book chronicles the dramatic events of October and November 1988, when investment firm KKR orchestrated a buyout of RJR Nabisco. This narrative is not just about financial maneuvers but also about the egos, ambitions, and power struggles of the key players involved. The authors, with their extensive access to the main characters, provide a detailed and engaging look into the high-stakes world of corporate finance. The book is a must-read for anyone interested in understanding the complexities of business and the human elements that drive it.

Key Ideas

1

Corporate Greed and Ambition

The book highlights the extreme levels of greed and ambition that characterized the corporate world in the 1980s. The takeover of RJR Nabisco was driven by the desire for power and wealth, with key figures like Ross Johnson and Henry Kravis exemplifying this relentless pursuit. This theme underscores the lengths to which individuals will go to achieve their goals, often at the expense of ethical considerations.

2

The Mechanics of a Leveraged Buyout

"Barbarians at the Gate" provides an in-depth look at the mechanics of a leveraged buyout (LBO). The authors explain how KKR used borrowed money to finance the acquisition of RJR Nabisco, leveraging the company's assets to secure loans. This detailed explanation helps readers understand the financial strategies and risks involved in such high-stakes deals, making it an educational read for those interested in corporate finance.

3

Impact on Corporate America

The book also explores the broader impact of the RJR Nabisco takeover on corporate America. It marked a turning point in how business was conducted, with a shift towards more aggressive and financially driven strategies. The repercussions of this deal are still felt today, as it set a precedent for future mergers and acquisitions. This theme highlights the lasting influence of the events described in the book on the business world.

FAQ's

"Barbarians at the Gate" primarily focuses on the largest corporate takeover in Wall Street history, specifically the buyout of RJR Nabisco by the investment firm KKR. It delves into the financial maneuvers, egos, ambitions, and power struggles of the key players involved in this high-stakes event.

The book highlights several key figures, including Ross Johnson, the CEO of RJR Nabisco, and Henry Kravis, a partner at KKR. These individuals exemplify the extreme levels of greed and ambition that characterized the corporate world in the 1980s.

The takeover of RJR Nabisco marked a significant turning point in corporate America, leading to a shift towards more aggressive and financially driven business strategies. The repercussions of this deal are still felt today, as it set a precedent for future mergers and acquisitions.

๐Ÿ’ก Full 15min Summary

Ross Johnson's strategic maneuvering and charm led him from Nabisco to the CEO position at RJR Nabisco, highlighting a cultural clash between genteel tobacco and aggressive corporate politics.
0:00 / 1:43

Ross Johnson climbed the corporate ladder to become the CEO of RJR Nabisco in 1986. His journey began with his early professional life, where he displayed a knack for corporate politics. Johnson had a unique ability to charm directors and outsmart competitors. His strategic moves at Nabisco set the stage for him to assume the role of CEO after orchestrating a merger with RJ Reynolds Tobacco in 1985.

RJ Reynolds, a successful tobacco company based in Winston-Salem, North Carolina, had been thriving for over a hundred years. However, it was grappling with falling cigarette sales. To diversify into the food industry, its CEO, Tylee Wilson, decided to acquire Nabisco. Wilson appointed Johnson as his deputy, a decision he would soon regret. The two had conflicting styles, and Johnson began to undermine Wilson's authority with the board. Wilson's decision to keep Premier, a secret "smokeless" cigarette project, hidden from the board gave Johnson the ammunition he needed to turn the directors against Wilson.

Johnson began to rally board members like Sticht and Hugel, lobbying for their support to become the next CEO. He even threatened to resign, which forced Wilson to propose early retirement. However, Johnson and his allies persuaded the board that Wilson needed to step down immediately. In 1986, Wilson resigned, walking away with a hefty severance package. The board then appointed Johnson as CEO, marking the successful execution of his carefully crafted plan.

This story also highlights the cultural clash between the genteel tobacco culture at Reynolds and the aggressive style Johnson brought from Nabisco. It hints at the future conflicts between Johnson and other executives like Horrigan that would persist in the newly formed RJR Nabisco.

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