Chapter 1:Summary of the Barbarians At The Gate
"Barbarians At The Gate" by Bryan Burrough is a detailed account of the leveraged buyout of RJR Nabisco in the late 1980s. The book follows the power struggle between two groups of corporate raiders, led by Henry Kravis of Kohlberg Kravis Roberts (KKR) and Ross Johnson, the CEO of RJR Nabisco.
The story begins with Johnson's proposal to take RJR Nabisco private through a leveraged buyout (LBO). The plan involves borrowing large sums of money to finance the acquisition and paying off the debt with the company's cash flow. Kravis, a renowned takeover artist, also sees the potential in acquiring RJR Nabisco and launches his own bid.
The book delves into the competitive bid process, where both Johnson and Kravis employ various tactics to outmaneuver each other. Burrough provides a detailed look at the personalities, egos, and strategies of the key players involved, painting a vivid picture of the highly charged environment of Wall Street during this period.
Throughout the book, the reader gets a sense of the financial intricacies and the immense risks involved in an LBO. Burrough explores the various financing options available to the bidders, as well as the role of investment banks in structuring the deal.
As the bidding war escalates, the book highlights the impact on the employees, shareholders, and the overall business of RJR Nabisco. Burrough also delves into the social and cultural aspects of the era, including the excessive lifestyles of the corporate elite and the criticism of the "barbarians" who prioritize financial gains over other considerations.
In the end, KKR emerges victorious, acquiring RJR Nabisco for a record-breaking $25 billion. However, the company's financial health suffers as a result of the massive debt burden, leading to a decline in profitability and layoffs.
"Barbarians At The Gate" is not only a gripping narrative of a high-stakes corporate battle but also offers insights into the world of Wall Street, corporate greed, and the consequences of financial engineering.
Chapter 2:the meaning of the Barbarians At The Gate
"Barbarians at the Gate" is a non-fiction book written by Bryan Burrough and published in 1990. The book tells the story of the leveraged buyout (LBO) of the American food giant RJR Nabisco by private equity firm Kohlberg Kravis Roberts (KKR).
The title "Barbarians at the Gate" metaphorically refers to the aggressive and predatory nature of the players involved in the LBO, as well as the hostile takeover tactics employed during the bidding war for RJR Nabisco.
Burrough's book provides a detailed account of the events leading up to the leveraged buyout, the key players involved, and the strategies employed to secure the deal. It depicts a high-stakes financial game in which competing firms, including KKR, Shearson Lehman Hutton, and Salomon Brothers, engage in fierce negotiations, raising the stakes to unprecedented levels.
The book also sheds light on the excesses and greed of Wall Street during the 1980s, as well as the booming corporate culture and the rise of financial engineering. It offers insights into the motivations, personalities, and strategies of the main characters, including KKR founders Henry Kravis and George Roberts, RJR Nabisco's CEO F. Ross Johnson, and various bankers and lawyers.
"Barbarians at the Gate" not only provides an entertaining and informative narrative of one of the biggest corporate takeovers in history but also serves as a critique of the era's excessive financial practices and the impact they had on the business world.
Chapter 3:the Barbarians At The Gate chapters
Chapter 1: The RJR Nabisco Saga Begins
This chapter introduces the reader to the corporate culture at RJR Nabisco, highlighting the extravagant lifestyle of its CEO, Ross Johnson. It also discusses the declining performance of the company and the increasing pressure from shareholders.
Chapter 2: The First Attack
In this chapter, Burrough describes the first attempt to acquire RJR Nabisco by Ross Johnson himself. He seeks potential investors and forms a management-led buyout (MBO) group. However, his plan faces opposition from within the company.
Chapter 3: The Barbarian Hordes Gather
This chapter introduces other players in the saga, including Peter Cohen, CEO of Shearson Lehman Hutton, and his rival Henry Kravis, co-founder of Kohlberg Kravis Roberts (KKR). Cohen and Kravis plan to beat Johnson's offer and acquire the company for themselves.
Chapter 4: A Pile of Cash
Burrough explores the financing options available to Johnson, Cohen, and Kravis. They seek funding from various sources such as banks, junk bond investors, and pension funds.
Chapter 5: The Deal of the Century
This chapter focuses on the intense bidding war between Johnson and KKR. Burrough describes the tactics used by both sides to gain an advantage and secure the deal.
Chapter 6: I Have Made a Terrible Mistake
After winning the bid, Kravis begins to doubt the soundness of the investment. Burrough narrates the apprehensions that arise after the deal is completed and the challenges KKR faces in managing the company.
Chapter 7: The Battle of the Titans
This chapter delves into the strained relationship between Ross Johnson and Henry Kravis. Burrough describes the power struggle and clashes between the two men as they try to assert control over the company.
Chapter 8: The Consultants
Burrough discusses the involvement of various consultants who were hired to help KKR turn around RJR Nabisco. He sheds light on their conflicting advice and the difficulties faced in implementing their recommendations.
Chapter 9: The White Knight
As KKR's control over the company becomes tenuous, Burrough introduces F. Ross Johnson's last-ditch effort to regain control by finding a white knight to acquire RJR Nabisco.
Chapter 10: The Aftermath
This chapter explores the long-term consequences of the RJR Nabisco buyout. Burrough discusses the impact on the individuals involved, the culture of corporate America, and the future of leveraged buyouts.
Throughout the book, Burrough provides a comprehensive account of the RJR Nabisco buyout, painting a vivid picture of the high-stakes world of corporate finance and the power struggles that accompany such deals.
Chapter 4: Quotes of the Barbarians At The Gate
- "The most valuable commodity I know of is information." - Henry Kravis
- "Let's face it: greed and money are what make capitalism work." - Bryan Burrough
- "In the annals of Wall Street, few are the tales of such brazen indulgence." - Bryan Burrough
- "It's not about the money. It's about control." - Henry Kravis
- "Leveraged buyouts aren't about management. They're about the balance sheet." - Jerome Kohlberg Jr.
- "It's a blood sport, like any other." - Jerome Kohlberg Jr.
- "In the end, it all comes down to who controls the company." - Bryan Burrough
- "Greed, for lack of a better word, is good." - James Robinson III
- "In this game, there are no permanent friends or permanent enemies. Only permanent interests." - Ted Forstmann
- "Sometimes, the barbarians win." - Bryan Burrough
- 00:00 Kapitel 1
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