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on 24 May 2004
One of the best books I've read. It appeals on several levels. It's a thriller, a business book, an expose of the greed at the highest corporate levels and a guide to investment banking. Most of the characters in the book (including Henry Kravis who remains a major influence in global business) emerge with no credit whatsover - greedy, manipulative and with their focus purely on the fees that huge mergers and acquisitions generate for the investment banking community. The pigs at the trough nature of the bankers coupled with the vanity and profligacy of the RJR top management are quite breathtaking. Throw in some hugely ambitious, upwardly mobile spouses and you have a riveting read. Highly recommend
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on 16 April 1999
It's hard enough to grow your business, keep employees and customers happy, and fend off the competition. A public company also has to be wary of circling sharks. Beware! I was struck that the biggest problem that the RJR Nabisco management had was complacency. I can understand why they felt that way, because the company lived such a rich life style for its executives. Private companies also have to worry about complacency. It eats away at you slowly, more like rust (when you are private, as we are). By the time you notice the damage from the rust, all your metal is ruined. I recently read The 2,000 Percent Solution, and found that to be a good resource for helping me ask myself the questions I need to answer to be a more effective CEO. RJR Nabisco could have used both of these books.
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on 17 September 2011
the leveraged buy out of rjr nabisco was, as far as i am aware, the largest of it's kind in the 1980's. this book details exactly what happened. what makes this book a great read is that it tells the reader exactly what happened. what i really like about this book is that it that it indirectly gives you an indepth study of the ceo of rjr nabisco at that time - ross johnson. if anyone wants career advice then this should be the guy you get advice from - the book explains how he rose to get to the top job in one of the largest brands in america at the time - and how he got the best from people... a good book, but in all fairness, incredibly heavy - could have been a hundred pages shorter...
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on 21 November 2011
To understand how business works in today's global economy, this is an essential text to read. The influence of KKR and the legacy of the RJR Nabisco deal continues. The authors pay remarkable attention to the ebb and flow of the transaction itself, having already set the scene in a thorough, yet fluid, way by sketching the key personalities and tracing the origins of RJ Reynolds and Nabisco. The chapters dealing with the latter could stand on their own merits as a way of understanding how corporate USA grew to maturity, and the enterprise culture underpinning it.

Once I had been through the various skirmishes that eventually delivered RJR Nabisco to KKR, I had a better understanding of the importance of bold thinking, integrity, and long-term vision, supported by awareness of the facts, others' motives and their possible strategies, that the leaders of the various parties drew on, even if their abilities to do so did not take them ultimately in the right direction. Some of the 'characters' in the book measured up to these standards, while others withered. Ted Forstmann and Steve Goldstein in particular shine through for their stamina and integrity, at least as described in this account's epilogue. But I think it's Henry Kravis who is worthy of a book devoted to him alone to examine what makes him tick.
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on 8 June 2011
This is an excellent narration of the attempt for what is now known as a leveraged buyout in the 1980's. In itself it is a fascinating tale. As an illustration of how greedy bankers are and how little value they add to society it is superb. As ever, senior management chase their own rewards and the rest of the workforce can but sit and watch. Rarely has so much been earned for so little value.
The book now has the benefit of a an afterword that tracks the main characters over the subsequent 20 years. Truly fascinating!
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on 29 July 2012
This should be mandatory reading for anyone working or planning to work in Finance. It is an important book both from a historical point of view, since it speaks of the great LBO/Junk bonds period of the 80's and its actors, as much as a guide into the world of corporate take overs and Finance in general. It speaks of social ascension, multi billion dollar deals, oversized egos, betrayal, greed - the whole cocktail.
One thing that amazed me about this book is the amount of details and the diversity of characters that the authors have covered - it is so detailed at times that it almost feels like you are there, in the negotiation rooms, with the bankers and the CEOs.
That said I found the first part of the book more interesting than the second for the faster pace, variety of subjects and characters and historical flashbacks.
At almost 600 pages tough - and very small prints - this book is no quick read, but it will no doubt pay out personally and in your career to read this book.
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on 2 July 2009
This book was recommended to me by quite a few friends over the last 4-5 years but its only now that I got around to read it - And boy, was I blown away by it !!!!

It takes some time to get used to all the names and players and it might help if you can draw a graph or diagram of some sort, but once you get through the first 50 pages, it grips you like a thriller - And to think this all happened for real.

The authors have worked hard to get the story from various parties and have done an excellent job !!!

I was actually sad when I finished it, as I know I wont find anything so gripping to read on the train to work anymore

Highly recommened
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on 25 May 2009
I was looking forward to this book after reading some great reviews but have to say that I struggled to stay with it. Perseverance eventually got me to the final third of the book which was extremely enjoyable but before that I found the book more than a little plodding. There was far too much boring detail about Ross Johnson who despite being a key participant in events was not a particularly interesting or likeable character. In fact its an awful long time before the leveraged buy out of RJR Nabisco becomes interesting and for me this book served as nothing more than an interesting historical marker for how Wall Street functioned in the 80's.
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on 1 April 2013
This book sits firmly in the "oldie but goodie" category, and is one of my all-time favourites. It's about the (ultimately unsuccessful) attempt by RJR Nabisco CEO Robert Johnson to arrange a leveraged buyout of the company.

The gist of the story:
In 1988, the share price of RJR Nabisco had been depressed for several years. At the time, RJR Nabisco was a holding company for Reynolds (cigarettes: Winston, Salem and Camel) and Nabisco (one of America's largest food companies; Oreos, etc). An increase in anti-smoking sentiment in equity-land due to increased litigation risk had meant that despite holding the food assets, the shares traded at a discount all round.

This was the 80s of course, and leveraged buyouts (LBO) were all the rage, with junk bond money freely available. Unlike a traditional takeover where you need a lot of (your own) money to buy a target company, the acquirer in an LBO borrows almost all of the money needed to buy the company. At the time, junk bonds (high interest rate for high risk bonds) were extremely popular amongst investors and it was relatively easy to raise huge amounts of cash, particularly for undervalued businesses.

Whereas a bank will often take property and other fixed assets as collateral for a conventional loan, in an LBO the acquirer uses the future cash flows of the company as the collateral for their debt - meaning they can (or used to be able to) stretch the boundaries of financing beyond traditional levels (a bit like you or I would do when we buy an investment property). The fees - and brand cache - were enormous for the banks involved too, obviously.

Johnson, frustrated with a low stock price, and after an approach from Henry Kravis (of Kravis, Kohlberg & Roberts) decided to propose a management led LBO - the largest in history - of the firm. Given the stability of the cash flows that Reynolds churned out, the company was the perfect candidate for leverage but until then no-one had thought it would be possible to close an LBO of such scale ($20 billion USD). Unfortunately for Johnson, his announcement made it clear to every LBO fund on The Street that it was possible. The flood gates now open, the supposed simple transaction soon turns into an aggressive bidding war amongst other potential acquirers.

Johnson moved on from Kravis to Shearson Lehman Hutton, and KKR re-entered the battle on their own terms, as did Ted Forstmann at Forstmann Little. The battle became as much about ego and letterheads as money from that point. From an initial proposal of $75 a share, the battle was "won" by KKR with $112 a share. Johnson parachuted out with $60 million, so don't feel too bad for him.

The story within the story is magnificent though, including Johnson's insane spending as a CEO, and corporate governance in a time where those pesky things called "shareholders" were rarely thought of unless they were institutional. I know we still have some cowboys around in charge of companies now, but they weren't in charge of companies big enough to be on the Dow.

It's an easy read, good for a holiday or to or from work.
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on 14 February 1999
I am a management consultant who works with companies that are interested in improving stock price, and I know many of the people portrayed in BARBARIANS AT THE GATE. I would like to put this book into perspective for you. 20 years ago our firm did a survey of CEOs and found that 99 percent felt that trying to improve stock price was unethical and immoral, and involved doing manipulative things. After the takeover wars of the 1980s, most CEOs believed that improving stock price was an important task and could be done in an ethical way. There is nothing more disruptive to a company than to go through a hostile takeover, whether the bid succeeds or not. Raw greed and lust for power hold sway at such times, and many people will pay the price for having attracted the sharks into their swimming pool. Prior to the RJR Nabisco purchase by KKR, many companies felt safe because of their size. They were suffering from "stalled" thinking, because it was widely believed that a deal of this sort could not be financed with debt at the time the takeover occurred. That was wrong: For a price, the money is always there. For those who have not been in these bruising ego battles, what you will not realize is that these contests are a lot like those you will remember from grade school on the playground when the teachers were not around. Bullying, threats, and naked power carry the day in a lot of situations. But because this is about ego, a lot of mistakes are made. RJR Nabisco still has mountains of debt even after lots of refinancings because of the LBO. KKR's track record looks a lot different now than it did before buying RJR Nabisco. A lot of the fever behind the LBO's is gone, for now. Bring back a bear market for a few years, and this whole phenomena will recur. Some smart lawyer will find a way around the defenses that so many rely on for now. The only ultimate defense against the circling sharks is to have a high-priced stock. That is the only timeless lesson for companies. If you are wondering how accurate this book is, it is more right than wrong. The authors did, however, miss some of the most intriguing ironies of the situation. Perhaps someday, someone with inside knowledge will write the sequel or unveil the whole, delicious irony. That should be a great story that will outsell GONE WITH THE WIND..
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