This book is one of the best business books out there and you wont waste a penny on it.The story shows how greed and money can destroy even the wildest of dreams and ambition in the world that we live in.The go go 80's was the time of the big swinging you-know-what believing themselves as the masters of the universe thus inevitably above everything else.
The story of how a great american company RJR Nabisco losest battle for control of the company by a group a financiers of KKR led by Henry Kravis.The story unfolds from the time Ross Johson,the CEO of RJR Nabisco, decides to take the company private.In doing so he puts the company in play and then the action begins to take place as other huge financial firms with ego as huge as Ross Johnson try to get a piece of the action.In the end there is only one winner and doznes of losers.
Barbarians at the gate also gives you an insight on the LBO fad and how it works.Those who follow wallstreet in the 80's know that non of this could have happened werent it for the service of Michael Milken and his junk bonds.in any case,it is interesting how the authors who obviously went to great lengths researching and interviewing the players involved and displays the facts in such an entertaining manner you wish you wanted to finish the book in one sitting!!
The only con i found was the story of how RJR and Nabisco came into existent (the authors stretch this bit too far when they could have done it in 15 pages). nonetheless, it was a great read.
10 stars for this book!!
I am a management consultant who works with companies that are interested in improving stock price, and I know many of the more humble people portrayed in BARBARIANS AT THE GATE.I would like to put this book into perspective for you. 25 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 necessarily 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 large 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 continued to strain under mountains of debt for years, 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 multiple 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.
With the benefit of this context, I do recommend you read the book. You'll find it stranger than fiction in many ways, and very exciting to watch. The authors have captured the emotion of the moment very well. It's a whale of a story.
