Business

Barbarians at the Gate: 8 key ideas

by Bryan Burrough & John Helyar

The core ideas of Barbarians at the Gate, each in under a minute, written in our own words. Want the full depth? Get the book.

1. IDEA 1 OF 8

   A takeover became a frenzy

   Burrough and Helyar tell the story of the 1988 battle to buy RJR Nabisco, a huge food and tobacco company.

   It became the largest leveraged buyout of its time and a symbol of Wall Street excess.

2. IDEA 2 OF 8

   A chief executive started it

   Ross Johnson, RJR Nabisco's chief executive, proposed buying the company with borrowed money.

   His move triggered a bidding war. In the authors' account, this was a bold plan that surprised many people, since the company was well known and already large.

3. IDEA 3 OF 8

   Leveraged buyouts use debt

   The authors explain leveraged buyouts, where buyers use large amounts of borrowed money to purchase a company.

   The debt is repaid from the company's earnings. This means the buyer uses little of its own money, and the risk is that the company must earn enough to pay the debt.

4. IDEA 4 OF 8

   KKR entered the fight

   The private equity firm KKR made a rival bid.

   Competition between bidders drove the price higher. In the authors' account, its entry turned a deal into a battle, with each side raising its offer to try to win.

5. IDEA 5 OF 8

   Executives enjoyed luxury

   The authors describe the lavish lifestyle of RJR Nabisco executives, including corporate jets.

   Excess was common. In the authors' account, such comforts were a sign of how rich the company was, and drew criticism from outside observers.

6. IDEA 6 OF 8

   Greed shaped decisions

   The authors portray many participants as driven by fees and personal gain.

   Shareholders' interests were often secondary. In the authors' account, many of those involved seemed to care more about their own gain than about the company or its owners.

7. IDEA 7 OF 8

   KKR won

   KKR won the bidding war with an enormous offer.

   The company was left with huge debt. In the authors' account, the winning price was very high, so the company had to pay back a large burden after the deal.

8. IDEA 8 OF 8

   The deal symbolised an era

   The authors present the deal as a symbol of the 1980s, when debt and dealmaking dominated Wall Street.

   It raised questions about corporate behaviour. In the authors' account, the story captured a period when huge deals made headlines, and some people questioned how it all worked.