Barbarians at the Gate: The Fall of RJR Nabisco

Barbarians at the Gate: The Fall of RJR Nabisco (1989) by Bryan Burrough and John Helyar is regarded as one of the most important business histories based on investigative journalism. The book was born out of The Wall Street Journal's coverage of the 1988 leveraged buyout (LBO) of food-and-tobacco company RJR Nabisco—the largest deal of its kind in history at that time. Barbarians at the Gate features the biographies of key players, including F. Ross Johnson of RJR Nabisco, Henry Kravis of Kohlberg Kravis Roberts (KKR), and Ted Forstmann of Forstmann Little, to highlight the power of individual corporate personalities and the clashes between them. This book is a story of corporate excess, manipulation, greed, and cutthroat rivalry. Barbarians at the Gate was so popular at the time of its release that it was made into a 1993 film with the same title.

This guide references the 2009 HarperCollins Kindle edition.

Summary

Barbarians at the Gate is a narrative history of the RJR Nabisco LBO based on an in-depth Wall Street Journal investigation and over 100 interviews conducted in 1989, the year after the LBO took place. The book focuses on both the corporate history of RJR Nabisco and the changes that took place on Wall Street more broadly in the 1970s and ‘80s. In addition to a business history, it can also be considered a work of biography, profiling in detail such personalities as RJR Nabisco’s chief executive F. Ross Johnson and Henry Kravis of KKR—the winner of the 1988 LBO bid war. The authors highlight the role of individual personalities—like those of Johnson and Kravis—in major corporate and financial decisions that impacted huge numbers of people. The town of Winston-Salem, North Carolina, which grew up around the RJ Reynolds Tobacco Company, is presented as a microcosm of American history—with its hardworking 19th-century immigrants, enterprising businesspeople, and changing social mores.

Intended for a broad, general audience, the book features commentary and gossip about corporate leaders, celebrities, and politicians linked to the RJR Nabisco story. The authors also explain key financial terms, especially “leveraged buyout” and “junk bonds.” Over its 18 chapters, the book builds a chronological narrative focused on rising action, highlighting the inherent suspense and drama of its events. The climax of Barbarians at the Gate is the bidding war over RJR Nabisco, which included the Shearson Lehman Hutton-led management group bid featuring Shearson’s Peter Cohen and RJR Nabisco’s Ross Johnson, KKR, Forstmann Little, and First Boston. The tension is resolved in the final chapter when KKR is announced as the winner, though the victory proves Pyrrhic, as the enormous debt load KKR takes on to finance the purchase ultimately sinks the company.

Barbarians at the Gate features several key themes. For instance, the theme of Wall Street excess and corporate greed features prominently throughout the entire book. The examples include Wall Street firms charging exorbitant fees for mergers-and-acquisition services, regardless of a deal’s success; using corporate jets to transport a beloved pet; throwing private parties at the Metropolitan Museum of Art; and paying hundreds of thousands of dollars for appearances by sports celebrities, like OJ Simpson, who then fail to appear. The increasingly self-indulgent lifestyle of corporate bosses coincides with the rise of excessive risk-taking on Wall Street in the 1980s, as firms began to rely more heavily on junk bonds and debt-based financing.

A key recurrent literary motif, which doubles as a theme, is the symbolism of war. The book’s title, Barbarians at the Gate, references the fall of the Roman Empire at the hands of Germanic invaders known to the Romans as “barbarians.” Whereas Rome may have had a higher level of technological advancement, the persistence and ingenuity of the invaders led to their ultimate triumph. Here, a major company was subject to a successful hostile takeover. The authors often draw parallels between business competition and war, for example, by referring to the “cookie wars” in Kansas City, their “Pearl Harbor,” or each investment firm’s “troops” (36, 422, 442). By using such symbolism, Burrough and Helyar highlight the aggressive nature of the corporate world and Wall Street, in which fortunes and careers could be made or lost.