Barbarians at the Gate is a book written by Bryan Burrough and John Helyar that chronicles the leveraged buyout (LBO) of RJR Nabisco. The book provides a detailed account of the events leading up to the buyout, the negotiations between the parties involved, and the aftermath of the deal. It is a fascinating read that offers a unique insight into the world of high finance and corporate takeovers. In this article, we will take an inside look at Barbarians at the Gate and explore some of its key insights.
Overview: Barbarians at the Gate by Burrough and Helyar
Barbarians at the Gate is a non-fiction book that was first published in 1989. It tells the story of the leveraged buyout of RJR Nabisco, a food and tobacco conglomerate, by Kohlberg Kravis Roberts (KKR), a private equity firm. The book is based on extensive research and interviews with the people involved in the deal, including the executives at RJR Nabisco, the investment bankers, and the lawyers.
The book is divided into three parts. The first part provides background information on RJR Nabisco and the key players involved in the deal. The second part covers the negotiations between the parties, including the bidding war between KKR and a rival bidder, Forstmann Little. The third part deals with the aftermath of the deal, including the impact on the employees of RJR Nabisco and the legacy of the buyout.
Key Insights: Inside Look at Barbarians at the Gate
One of the key insights from Barbarians at the Gate is the importance of leverage in LBOs. KKR was able to acquire RJR Nabisco by using a combination of debt and equity financing. The debt was secured by the assets of RJR Nabisco, which meant that if the company failed to make the required payments, the assets could be sold to repay the debt. This allowed KKR to acquire the company without using much of its own money.
Another insight from the book is the role of investment bankers in LBOs. Investment bankers play a crucial role in facilitating LBOs by providing advice on financing, negotiating with lenders, and structuring the deal. In the case of RJR Nabisco, the investment bankers earned millions of dollars in fees for their work on the deal.
The book also highlights the conflicts of interest that can arise in LBOs. The executives at RJR Nabisco were motivated by their own self-interests, which sometimes conflicted with the interests of the shareholders. The investment bankers were also motivated by their own self-interests, which sometimes conflicted with the interests of their clients.
Another insight from the book is the impact of LBOs on the employees of the target company. The LBO of RJR Nabisco resulted in massive layoffs and a significant reduction in benefits for the remaining employees. The book raises important questions about the social responsibility of companies and the ethics of LBOs.
Finally, Barbarians at the Gate provides a fascinating glimpse into the world of high finance and corporate takeovers. The book is filled with colorful characters and dramatic events that make for an engaging read. It offers a unique perspective on the inner workings of the financial world and the motivations of the people who operate within it.
Barbarians at the Gate is a must-read for anyone interested in finance, business, or corporate culture. It provides a detailed and insightful account of one of the most significant corporate takeovers in history and raises important questions about the ethics of LBOs. The book is a testament to the power of investigative journalism and the importance of holding corporations accountable for their actions.
