Barbarians at the Gate: The Fall of RJR Nabisco

by Bryan Burrough

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.

learned,” he said, “you always tell people how badly you’ve been running the goddamned company, so they’ve got some upside.”

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

Johnson would speak of stock multiples and capital structures. He would recite all the steps he had taken to get the stock up: the profit gains, the pristine balance sheet, the stock buy backs, and Premier. It was all true, but it was intellectual window dressing for something much deeper. He could never leave well enough alone. There was shit to be stirred.

“Sunlight is the best of all disinfectants,” he told Kravis. If Kravis was worried about Johnson stealing this deal in some darkened back room, Wasserstein argued, he should shed some sunlight on the process. And the best of all illuminations, he continued, was an immediate tender offer.

they have access to every piece of confidential information, they had a management team to analyze it. They knew where every last dollar was stored, which budgets could be slashed without hurting the business, which plants could be mothballed without slowing production. Information was the key to success, and Kravis was on the outside looking in.