Barbarians at the Gate: The Fall of RJR Nabisco

John Helyar (b. 1951) is an American author, journalist, and investment researcher. His reporting with The Wall Street Journal led to the publication of Barbarians at the Gate with Bryan Burrough.

Helyar graduated from Boston University and went on to write for several publications in addition to The Wall Street Journal, including Bloomberg and Fortune magazine. After completing Barbarians at the Gate, he published Lords of the Realm: The Real History of Baseball (1994).

Helyar is married to Betsy Morris, a senior writer at The Wall Street Journal. He is also a Director of Research at Jadian Capital focused on the analysis of financial institutions.

Peter A. Cohen (b. 1946) is an investment banker and philanthropist. During the events described in this book, he was the chief executive and chairman of Shearson Lehman Hutton, whose 1988 RJR Nabisco bid failed. He is one of the strongest personalities profiled by the authors.

Cohen was born in New York. He graduated from Ohio State University and in 1969 went on to earn an MBA from Columbia Business School. In the 1970s, his Wall Street career began with working for Reynolds & Co followed by the Republic New York Corporation. Starting in 1983, Cohen became chief executive officer and chairman of the merged Shearson Lehman American Express. In 1988, the firm became Shearson Lehman Hutton. It was then that Cohen attempted to carry out an LBO of RJR Nabisco with Ross Johnson’s management group but failed.

In the early 1990s, Cohen worked for the Republic National Bank of New York and founded Ramius Capital Group in 1994. He also founded his personal investment platform Peter Cohen LLC in 2019. Cohen’s philanthropic pursuits include The Ohio State University Foundation and The New York City Opera.

Theodore J. Forstmann (1940–2011) was an American lawyer, businessman, and philanthropist. In this book, Forstmann is profiled as the head of Forstmann Little & Company, which unsuccessfully pursued the RJR Nabisco LBO. He is best known as a critic of the overuse of junk bonds and excessive risk-taking on Wall Street in the 1980s and beyond, including in the leadup to the 2008 financial crisis.

Born in Connecticut to a wealthy family, the young Forstmann suffered abuse at the hands of his alcoholic father. By the time he entered college, Forstmann’s father had died, and the family had lost most of its money. Forstmann attended Yale University and Columbia Law School, where he earned a JD. After losing his family money, Forstmann paid for his education by gambling.

In 1978, with the investment banker Brian Little, Forstmann founded Forstmann Little & Co., a firm that went on to achieve Wall Street success by investing in such companies as Gulfstream Aerospace. In 1988, Forstmann attempted an unsuccessful bid for RJR Nabisco. However, he avoided the use of risky junk bonds, a practice of which he was highly critical. Forstmann’s rivalry with Henry Kravis takes on an additional dimension, as Kravis is known as a champion of the high-risk practices Forstmann decries.

Starting in the 1990s, Forstmann focused on philanthropy in the arts and education. He was also active in the Republican Party, supporting both George H. W. Bush and George W. Bush.

John Gutfreund (1929–2016) was an American banker. In this book, he plays a key role as the CEO of Salomon Brothers, an important Wall Street investment bank of the 1980s and a participant in the RJR Nabisco bidding war. The authors describe Gutfreund as ruthless and Machiavellian and, thus, extremely successful.

Gutfreund grew up in New York in a privileged family. He went on to earn a degree in English from Ohio’s Oberlin College. Gutfreund then served in the Korean War. Later, he joined Salomon Brothers as a trainee and quickly rose through the ranks to lead the firm by the late 1970s. As the CEO, Gutfreund participated in such key deals as the RJR Nabisco buyout bidding war. In 1991, he resigned because of a scandal. Ultimately, Gutfreund went on to establish a consulting firm, Gutfreund & Company.

Frederick Ross Johnson (1931–2016) was a Canadian businessman. In the 1980s, he was the chief executive officer of RJR Nabisco—the subject of this book. The authors describe Johnson as a “breezy playboy” who was “cocksure, buoyant, bubbly” (284, 16).

Born in Winnipeg, Canada, during the Great Depression, Johnson attended the University of Manitoba and earned a Bachelor of Commerce degree. In 1956, he also earned an MBA from the University of Toronto. He went on to work in accounting for General Electric and in merchandising at T. Eaton Company. He then became president of Standard Brands.

Following the merger of Standard Brands and Nabisco, Johnson relocated to New York City from Canada and became its CEO. By 1985, he helped merge Nabisco and RJ Reynolds Tobacco Company. In business circles, he was referred to as “The Pope,” and his associates were the “Merry Men.” The 1988 LBO of RJR Nabisco spiraled out of control with the involvement of multiple competing firms such as Shearson Lehman Hutton and Kohlberg Kravis Roberts (KKR). As a result of extensive media coverage, Johnson was perceived as a personification of greed and corporate adventurism.

When KKR won the leveraged buyout contest, Johnson left to establish his own investment firm, RJM Group, Inc.

Henry Kravis (b. 1944) is an American businessman and philanthropist. He is best known for his global investment firm, Kohlberg Kravis Roberts (KKR). The authors profile Kravis in this book as one of the key players in the 1988 RJR Nabisco buyout.

Henry Kravis was born in Oklahoma. He received a degree in economics from Claremont McKenna College and went on to earn an MBA from Columbia Business School in 1969. Subsequently, Kravis worked in New York City’s financial industry, including Bear Stearns. In 1976, he founded KKR with his cousin George Roberts and mentor Jerome Kohlberg Jr. after leaving Bear Stearns. They were the pioneers of leveraged buyouts in the industry. In 1987, Kohlberg left KKR. A year later, KKR carried out an LBO of RJR Nabisco, the subject of this book—the most expensive deal in history at that time. In 1995, however, KKR divested its remaining RJR Nabisco assets.

Kravis divorced his first wife, Hedi Shulman Kravis, and married fashion designer Carolyne Roehm, both of whom are briefly profiled in this book. After divorcing Roehm in 1993, he married Marie-Josée Drouin Kravis, a Canadian economist.

KKR invested in several other companies over the years, including Beatrice Foods, Hospital Corporation of America, Safeway, and Duracell. In 2021, Kravis and Roberts stepped down from KKR and were succeeded by Joe Bae and Scott Nuttall.

Carolyne Roehm (b. 1951) is an American fashion designer, socialite, and author. In this book, she is profiled as Henry Kravis’s second wife.

Roehm was born Jane Smith in Missouri. Upon her graduation with a fashion-design degree from Washington University in St. Louis, Smith moved to New York City and pursued fashion designer Oscar de la Renta until he hired her. Eventually, she became his assistant designer.

Smith got her last name, Roehm, from her first husband, Axel Roehm, to whom she was married briefly. She went on to marry Henry Kravis in 1985. That year she also launched her own fashion business. She divorced Kravis in 1993. Eventually, Roehm moved away from fashion focused on product and interior design as well as accessories and published several books on these subjects.

In this book, the authors profile Roehm and Kravis as members of the so-called “Nouvelle Societé” of New York City. The couple was known for the exuberant properties they owned and the lavish parties they hosted with celebrities and politicians. Their wealth was a symbol of the 1980s Wall Street excess that the authors describe.