Barbarians at the Gate

I am going to write my reaction about one of the most viewing the film "Barbarians at the Gate,". I found that the movie teaches people how to behave themselves in sphere of business. The film based upon a novel by the same title, I was able to get a small glimpse into the hostile world of corporate life in the mid to late 1980's. At first glance I was astonished by the lack of morals and ethics within this community, but upon further investigation I deduced that this incredible greed is what drove the economy. Without this greed, corporate America would have never grown to their immense size.

If I inform about the film, it was directed by Glenn Jordan and written by Larry Gelbart. It stars James Garner as F. Ross Johnson, the CEO of RJR Nabisco, and Jonathan Pryce as Henry Kravis, his chief rival for the company. It also features Peter Riegert, Joanna Cassidy and Fred Dalton Thompson.

The film won both the Primetime Emmy Award for Outstanding Television Movie and the Golden Globe for Best Television Movie while James Garner won the Golden Globe for Best Actor in a Miniseries or Movie. FOX also aired the film later in the same year.

Events of the film begins with the management of RJR Nabisco celebrating their victory over Anthony Cappallone, a man suing the tobacco company for contributing to the death of his wife, who had been a long time smoker. The trial was thought to be the culprit for restraining the price of stock in RJR Nabisco, but when the stock failed to rebound after the victory RJR Nabisco's CEO, F. Ross Johnson began to worry. Luckily, RJR had been developing a revolutionary cigarette, one with relatively no smoke or tar. This miracle product labeled Premier, was going to be RJR Nabisco's saving grace for their dwindling stick prices. But after intense testing, it was determined that Premier's "tasted like s***, and smelled like farts." Knowing only one last way to increase the undervalued stock prices, F. Ross Johnson decided that along with Ed Horigan, head of RJR, and 3 other members of management, he would initiate a leveraged buyout (LBO). After first consulting Henry Kravis, the so-called king!

The free-spending Johnson's bid for the company is opposed by two of the pioneers of the leveraged buyout, Henry Kravis and his cousin. Kravis feels betrayed when, after Johnson initially discusses doing the LBO with Kravis, he takes the potentially enormous deal to another firm, the Shearson Lehman Hutton division of American Express.

Other bidders emerge, including Ted Forstmann and his company, Forstmann Little, after Kravis and Johnson are unable to reconcile their differences. The bidding goes to unprecedented heights, and when executive Charles Hugel becomes aware of how much Johnson stands to profit in a transaction that will put thousands of Nabisco employees out of work, he quips, "Now I know what the 'F' in F. Ross Johnson stands for." The greed is so evident, Kravis's final bid is declared the winner, even though Johnson's was higher.

The title of the book and movie comes from a statement by Forstmann in which he calls that Kravis' money "phoney junk bond crap" and how he and his brother are "real people with real money," and that to stop raiders like Kravis: "We need to push the barbarians back from the city gates."

Anyone can make a bid for the ownership of the company. But in Johnson’s mind, everything will turn out right, and no one would find out. A leveraged buyout is a good technique to acquire another company by means of large amounts of borrowed money in the form of bonds or loans, in order to reach the cost of acquisition. In here, the asset of the company being acquired is added up to the collateral for the loans being made. This is in order for the company to make large acquisitions without having to put out a lot of capital for the buy.

This is clearly what happened to RJR Nabisco, where the company’s assets were used as collateral in order to amass a great sum of money for the buy out. Everything was going well until they stumbled upon a formidable adversary in the form of the Wall Street Investment Banker, Henry Kravis. Kravis entered the scene along with other bidders who are interested in buying the company. Kravis was a part of a group known to be the kings of leveraged buy outs, the Kohlberg Kravis Roberts (KRR). KRR successfully buys out the RJR Nabisco from its previous owners at a price of $25Bn. All the efforts coming from F.

Ross Johnson have been put to waste. Barbarians at the Gate are a good exploration of one monolithic event in the history of leveraged buy outs. It clearly shows that anything could happen in the free market. In business, money has always been equated to power, and those who possess both of these usually get their way with things. But that’s not all; you also need to strategically think of every action you will take, because the business world is not a safe place: there would always be barbarians waiting outside the gates.

After watching the movie my own opinion is that there are many, many more object lessons in Barbarians at the Gate. It is the perfect storm of complications in a corporate negotiation, one that contained a number of adversarial elements. As a result, it’s well worth the read, for lawyers who represent corporate defendants, and for anyone who wants to see how an intensely competitive atmosphere (much like that among class-action plaintiffs) can make even the simplest proposed deal into something much, much more complicated.

In conclusion Barbarians at the Gate is considered as one of the most influential business books of all time -- the definitive account of the largest takeover in Wall Street history. Bryan Burrough and John Helyar's gripping account of the frenzy that overtook Wall Street in October and November of 1988 is the story of deal makers and publicity flaks, of strategy meetings and society dinners, of boardrooms and bedrooms -- giving us not only a detailed look at how financial operations at the highest levels are conducted but also a richly textured social history of wealth at the twilight of the Reagan era. Barbarians at the Gate -- a business narrative classic -- is must reading for everyone interested in the way today's world really works.