Barbarians at the Gate: The Fall of RJR Nabisco

Everyone in the room knew about leveraged buyouts, often called LBOs. In an LBO, a small group of senior executives, usually working with a Wall Street partner, proposes to buy its company from public shareholders, using massive amounts of borrowed money. Critics of this procedure called it stealing the company from its owners and fretted that the growing mountain of corporate debt was hindering America’s ability to compete abroad. Everyone knew LBOs meant deep cuts in research and every other imaginable budget, all sacrificed to pay off debt. Proponents insisted that companies forced to meet steep debt payments grew lean and mean. On one thing they all agreed: The executives who launched LBOs got filthy rich.

It is important to remember that, as Ken Auletta wrote in his definitive Greed and Glory on Wall Street, “no reporter can with 100 percent accuracy re-create events that occurred some time before. Memories play tricks on participants, the more so when the outcome has become clear. A reporter tries to guard against inaccuracies by checking with a variety of sources, but it is useful for a reader—and an author—to be humbled by this journalistic limitation.

He who’s not busy being born is busy dying.” Tony

Planning, gentlemen, is ‘What are you going to do next year that’s different from what you did this year?’” he told them. “All I want is five items.

Recognize that ultimate success comes from opportunistic, bold moves which, by definition, cannot be planned.

Through all the machismo, through all the greed, through all the discussion of shareholder values, it all came down to this: John Gutfreund and Tom Strauss were prepared to scrap the largest takeover of all time because their firm’s name would go on the right side, not the left side, of a tombstone advertisement buried among the stock tables at the back of The Wall Street Journal and The New York Times.

turn over the reins to the board of directors.

The minute you establish an organization, it starts to decay.

changes in the story were the result of normal editing.