Barbarians at the Gate: The Fall of RJR Nabisco

by Bryan Burrough

If it was Sticht’s aspiration to walk with kings, it was Wilson’s to be the hero of a Harvard Business School case study.

It was a symbiotic relationship repeated in deal after deal: raider seeks target; target seeks LBO; and raider, target, and LBO firm all profit from the outcome. The only ones hurt were the company’s bondholders, whose holdings were devalued in the face of new debt, and employees, who often lost their jobs. In the sheer joy of making money, Wall Street didn’t pay too much attention to either group.

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.

“Linda, you just don’t get it, do you? There’s just no way this board is going to give this company to Ross Johnson.”

Johnson’s problem was that he insisted on thinking in terms of the real world, real money, real investments. In effect, Goldstone said, this wasn’t the real world. This was Wall Street.

What did this all have to do with doing business?