Book Review — Barbarians at the Gate: The Fall of RJR Nabisco


Barbarians at the Gate is an excellent journalistic endeavor and a non-stop thrill from start to finish; highly recommended.

This is a posting of an old review I did ( for this book but never published here. Some edits have been made.

The tale of Ross Johnson, the CEO of RJR Nabisco who sets the book's plot into motion, and the frenzied time leading up to the final decision on who'll win the leveraged buy out (LBO) bid and take ownership of RJR Nabisco is fascinating. The authors do an excellent job of providing background for the many people involved (Kravis, Roberts, Johnson, etc.), much of which is crucial for understanding their motivations and decisions.

For example, the rise of Johnson through the ranks of Standard Brands (and then Nabisco after a merger), the late night drinking brainstorming sessions he has with those whom have risen with him, and his constant need to have change going on around him provide adequate background to explain his somewhat puzzling decision to think up and execute the idea of a LBO of RJR Nabisco: essentially the share price isn't where he wants it and he thinks RJR Nabisco is becoming staid.

The resulting frenzy of action unleashed by the (at the time) largest LBO in history, from Henry Kravis's (whom Johnson originally talked to about the LBO) wheeling and dealing to scrap together the money to enter the LBO bid to the surprise introduction of First Boston and their off-the-wall strategy to make a deal happen, kept the story going at a good pace and the authors did a nice job of flipping between different storylines to keep things from going stale.

The book also gives a great idea of how much the personalities of those involved in business deals affects the decisions made over and above what might be the 'objectively' sound thing to do. For example, Ted Forstmann's hatred of junk bonds caused trouble as others sought to use these as collateral for the LBO while the involvement of Bruce Wasserstein, formerly of First Boston, helped spur First Boston to make a bid.

In addition, it provides an overview of different financial devices---junk bonds, securities, and others---that one hears on the news but are not commonly put into context of how they are normally, or have been, used. This book is greatly completmented by other books about the often over the top and questionable financing that defined parts of the 80s and 90s: The Smartest Guys in the Room, When Genius Failed, and Den of Thieves are a couple worth reading.

Overall, Barbarians at the Gate is an excellent journalistic endeavor and a non-stop thrill from start to finish. The authors give a highly detailed account of the players' backgrounds and motivations along with enough detail about the events to paint a good picture of what went down. Even better, they refrain from passing their own judgment during the book, which helps the reader draw their own conclusions and allows one to understand (to a degree) why particular decisions were made without pre-conceived biases.

Highly recommended.



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