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The Fall of RJR Nabisco

4.1 (50 ratings)
19 mins

Brief summary

Barbarians at the Gate by Bryan Burrough and John Helyar tells the story of the leveraged buyout of RJR Nabisco, a turning point in American business culture that ushered in the era of the corporate raiders.

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    Barbarians at the Gate
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    Wall Street’s modern-day modus operandi started out as a work-around to avoid estate taxes.

    Have you heard the term leveraged buyout, or LBO? Well, by the 1980s, the LBO had become a dirty word, synonymous with corporate greed and the unhinged nature of Wall Street. But at its inception, the LBO was simply a way to preserve family wealth.

    These transactions were devised by clever lawyers who were looking for ways to help wealthy business owners skirt estate taxes and pass money onto their heirs. Not coincidentally, LBOs first came on the scene in the late 1960s, when a generation of people, some of whom had built massive business empires, were getting ready to retire.

    Because of the way estate taxes function, if business owners wanted to retire and pass their companies on to their heirs, they would have had to pay huge sums of money in taxes.

    Under these circumstances, they generally had three options: first, they could pass the company on to an heir and pay their taxes in full; second, they could sell the company, relinquishing control of it in the process; and finally, they could go public, putting the business – and its stock price – at the mercy of the market.

    Naturally, none of these three choices were especially appealing. So, a lawyer by the name of Jerry Kohlberg developed a solution, albeit a rather slow-moving and lengthy one.

    Say Mr. Big was retiring. His lawyers would found a shell company and bring in a number of investors who would take out massive loans to buy Mr. Big’s company out. Mr. Big would still keep a stake in his business, thereby maintaining some control, while the investors would have gotten the target company for a much lower price than if they acquired it at the end of a bidding war with other prospective buyers.

    The money for these buyouts would come from bank loans, insurance bonds and the personal funds of the investors. As a result, the investors involved only paid about ten percent of the cost, while getting 30 percent from insurance bonds and 60 percent from bank loans.

    In other words, the investors acquired the target company for almost nothing, while the shell company took on a massive amount of debt, the effects of which would be mostly felt by the target company.

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    What is Barbarians at the Gate about?

    Barbarians at the Gate (1989) tells the story of one of the largest corporate deals in US history, the leveraged buyout of RJR Nabisco. These blinks provide a gripping portrait of the extreme and extravagant behavior in corporate America during the 1980s.

    Barbarians at the Gate Review

    Barbarians at the Gate (1990) tells the gripping story of the battle for control of RJR Nabisco, one of America's largest corporations at the time. Here are three reasons why this book is worth reading:

    • With its detailed insider accounts and in-depth analysis, it offers a fascinating look at the high stakes and cutthroat world of corporate takeovers.
    • By exploring the complex characters and motivations involved, the book adds depth and nuance, making it more than just a dry business story.
    • The book's suspenseful narrative keeps readers engaged from start to finish, making it anything but a boring read.

    Best quote from Barbarians at the Gate

    When Kohlberg came up with the LBO, it was known as a bootstrap deal.

    —Bryan Burrough, John Helyar
    example alt text

    Who should read Barbarians at the Gate?

    • Anyone working in finance or business who wants to learn about a legendary deal
    • Citizens appalled by the excesses of corporate America
    • Anyone enthralled by hostile takeovers and cutthroat dealings

    About the Author

    Bryan Burrough and John Helyar are investigative journalists who covered the story of RJR Nabisco’s buyout as it happened. Their in-depth research and extensive interviews paint a fascinating picture of a unique period in the history of Wall Street.

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    Barbarians at the Gate FAQs 

    What is the main message of Barbarians at the Gate?

    The main message of Barbarians at the Gate is the intense battle for control of RJR Nabisco, revealing the greed and ambition of Wall Street in the 1980s.

    How long does it take to read Barbarians at the Gate?

    The reading time for Barbarians at the Gate varies depending on the reader's speed, but it typically takes several hours. However, the Blinkist summary can be read in just 15 minutes.

    Is Barbarians at the Gate a good book? Is it worth reading?

    Barbarians at the Gate is a captivating read that offers a fascinating glimpse into the high-stakes world of corporate takeovers. It's definitely worth reading!

    Who is the author of Barbarians at the Gate?

    The authors of Barbarians at the Gate are Bryan Burrough and John Helyar.

    What to read after Barbarians at the Gate?

    If you're wondering what to read next after Barbarians at the Gate, here are some recommendations we suggest:
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