''Barbarians at the Gate: The Fall of RJR Nabisco'' is a 1989 book about the
leveraged buyout
A leveraged buyout (LBO) is the acquisition of a company using a significant proportion of borrowed money (Leverage (finance), leverage) to fund the acquisition with the remainder of the purchase price funded with private equity. The assets of t ...
The Wall Street Journal
''The Wall Street Journal'' (''WSJ''), also referred to simply as the ''Journal,'' is an American newspaper based in New York City. The newspaper provides extensive coverage of news, especially business and finance. It operates on a subscriptio ...
HBO
Home Box Office (HBO) is an American pay television service, which is the flagship property of namesake parent-subsidiary Home Box Office, Inc., itself a unit owned by Warner Bros. Discovery. The overall Home Box Office business unit is based a ...
shareholder
A shareholder (in the United States often referred to as stockholder) of corporate stock refers to an individual or legal entity (such as another corporation, a body politic, a trust or partnership) that is registered by the corporation as the ...
s.
Summary
Those opposed to Johnson's bid for the company,
Henry Kravis
Henry Roberts Kravis (born January 6, 1944) is an American businessman, investor, and philanthropist.George R. Roberts, were among the pioneers of the
leveraged buyout
A leveraged buyout (LBO) is the acquisition of a company using a significant proportion of borrowed money (Leverage (finance), leverage) to fund the acquisition with the remainder of the purchase price funded with private equity. The assets of t ...
(LBO). Kravis was the first person Johnson had talked to about doing the LBO and felt betrayed after learning that Johnson wanted to do the deal with another firm,
American Express
American Express Company or Amex is an American bank holding company and multinational financial services corporation that specializes in payment card industry, payment cards. It is headquartered at 200 Vesey Street, also known as American Expr ...
's former Shearson Lehman Hutton division. Ted Forstmann and his Forstmann Little buyout firm also played a prominent role.
After Kravis and Johnson were unable to reconcile their differences, a bidding war took place which Johnson would eventually lose. The side effect of the augmented buyout price to the shareholders was the creation of a high level of
debt
Debt is an obligation that requires one party, the debtor, to pay money Loan, borrowed or otherwise withheld from another party, the creditor. Debt may be owed by a sovereign state or country, local government, company, or an individual. Co ...
for the company.
The title of the book comes from a statement by Forstmann, in which he called Kravis' money "phoney
junk bond
In finance, a high-yield bond (non-investment-grade bond, speculative-grade bond, or junk bond) is a bond that is rated below investment grade by credit rating agencies. These bonds have a higher risk of default or other adverse credit eve ...
crap" and declares him and his cousin as "real people with real money," also stating that to stop raiders like Kravis: "We need to push the barbarians back from the city gates."
American Express
American Express Company or Amex is an American bank holding company and multinational financial services corporation that specializes in payment card industry, payment cards. It is headquartered at 200 Vesey Street, also known as American Expr ...
HarperCollins
HarperCollins Publishers LLC is a British–American publishing company that is considered to be one of the "Big Five (publishers), Big Five" English-language publishers, along with Penguin Random House, Hachette Book Group USA, Hachette, Macmi ...
re-released ''Barbarians'' to mark the two-decade anniversary of the RJR deal. Media columnist Jon Friedman at
MarketWatch
''MarketWatch'' is a website that provides financial information, business news, analysis, and stock market data. It is a subsidiary of Dow Jones & Company, a property of News Corp, along with ''The Wall Street Journal'' and '' Barron's.''
...
opined on the occasion that it was "the best business book ever." Friedman spoke with the authors about the two-decade history of the book and of their ensuing careers (the two undertook no further joint projects)."'Barbarians at the Gate' authors reflect" by Jon Friedman, ''MarketWatch'', 11-21-08. Retrieved 12-8-22. Business reporter Andrew Ross Sorkin of ''The New York Times'' wrote in his book ''
Too Big to Fail
"Too big to fail" (TBTF) is a theory in banking and finance that asserts that certain corporations, particularly financial institutions, are so large and so interconnected with an economy that their failure would be disastrous to the greater e ...
'' that this is his favourite business book of all time.
Too Big to Fail
"Too big to fail" (TBTF) is a theory in banking and finance that asserts that certain corporations, particularly financial institutions, are so large and so interconnected with an economy that their failure would be disastrous to the greater e ...