Summary of Barbarians at the Gate

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Barbarians at the Gate book summary
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Rating

9

Qualities

  • Innovative
  • Background
  • Engaging

Recommendation

Some things – namely, greed and reckless behavior – never change. The leveraged buyout (LBO) of RJR Nabisco occurred in the late 1980s, but the 20th anniversary edition of this classic tale of excess reads as if it were reported and written today. Money-hungry CEO Ross Johnson and power-grabbing financier Henry Kravis remain relevant archetypes of their times. Journalists Bryan Burrough and John Helyar vividly capture the behind-the-scenes maneuvering in the deal of the decade. getAbstract especially enjoyed the update on Johnson, Kravis and the rest, and recommends this book to those seeking a revelatory, page-turning account of high-profile greed.

About the Authors

Vanity Fair special correspondent Bryan Burrough and Bloomberg News columnist John Helyar have also reported for The Wall Street Journal.

 

Summary

Unlocking Hidden Value with an LBO

The storied takeover of RJR Nabisco began when Ross Johnson, the company’s restless, free-spending CEO, looked to boost his company’s sagging stock price. RJR Nabisco ranked as the 19th-largest company in the United States, employed 140,000 workers and pumped out $1 billion a year in cash. Its brands included Oreo cookies, Ritz crackers, Life Savers candies, and Winston and Salem cigarettes. Despite hefty profits, shares languished below $50. Johnson thought Wall Street undervalued RJR Nabisco’s unusual mix of food and cigarettes. Johnson was a “noncompany man,” an unorthodox CEO who loved spending corporate money on swanky apartments, private planes and celebrity endorsement deals.

Johnson rose to prominence in the 1970s, when he became Canadian division president of American food company Standard Brands; he then survived a boardroom coup to become CEO. Johnson remodeled the staid headquarters and ended a ban on first-class business travel. The consummate schmoozer, Johnson held court late in the evening, drinking scotch with his top executives. Under Johnson, Standard Brands sponsored golf tournaments and signed personal services...


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