President and chief executive of RJR Nabisco and leader of the management group
Freewheeling and free-spending F Ross Johnson officially resigned as RJR Nabisco's chief executive on February 9 1989, two days after KKR's victory. After walking away with a package of around $60 million, he returned to a significant site in the Barbarians saga: the ?unremarkable glass tower at a suburban shopping centre named The Galleria?in Atlanta, Georgia.
Quote from Barbarians at the Gate*: ?A few million dollars,?he always said, ?are lost in the sands of time.?
*same source for boxed quote below and for all boxed quotes on following pages.
When Johnson initially relocated the RJR Nabisco headquarters from its base in Winston-Salem to occupy 11 floors of The Galleria, he became a pariah among Winston's residents and the RJ Reynolds old guard. But it is to The Galleria that Johnson returned to establish his private investment company, RJM Group, which he runs to this day from the same location with his son Neil and the same personal assistant he had back in the RJR Nabisco days.
RJM, which is solely focussed on managing the family fortune, has executed some interesting deals. It started with the $35 million acquisition of Nabisco's Asian operations, which RJM subsequently exited in 1993. The firm then went on to concentrate on commercial real estate, at one point owning five office buildings and financing a hotel chain.
?The real estate investment trusts came in and blew us out of the water,?Johnson told the Atlanta Business Chronicle in a 1998 interview. ?But it was very successful for all of us.? Details of RJM's current investments are not known.
Old friends are not far away in The Galleria. Former president of Coca Cola Don Keogh, who pops up in Barbarians to persuade Ross to move RJR Nabisco to Atlanta, runs his investment business from the same office suite.
Senior partner of Forstmann Little & Co and potential bidder for RJR Nabisco
?He read Winston Churchill's biography and identified with the statesman's lonely campaign to warn the world about Nazi Germany.?
On reading Barbarians it is difficult to decide whether the boss of Forstmann Little is a Wall Street powerhouse with a prescient view of the folly of junk bonds or a Wall Street relic failing to keep pace with a fast-moving market. His activity since the RJR Nabisco buyout is equally dichotomous.
Arguably Ted Forstmann's crowning achievement was the resurrection of Gulfstream Aerospace. His firm bought the corporate-jet maker in 1990 for $825 million, just before recession pushed the company to the edge of bankruptcy. Rather than walking away from the investment, as his investors would have liked at the time, in 1992 Forstmann injected another $236 million into the firm and installed himself as chief executive.
With this capital injection, the firm finalised production of a new model, the Gulfstream V, which went on to become a mainstay of corporate hangars across the world. Forstmann Little ultimately realised $3.1 billion from its $636 million investment in Gulfstream.
Those were the good times. In 2004 Forstmann found himself, at the age of 64, in the witness box of a Connecticut courtroom as his firm faced charges of a breach of contract on the basis of ?strategy shift?. In a nutshell, Forstmann Little had committed $2.5 billion to two telecoms companies, McLeodUSA and XO Communications. Both investments strayed from Forstmann's (right) core competency, the former being a $1 billion minority stake of just 12 percent, the latter being a $1.5 billion bet on what was essentially a startup. In December 2004, Forstmann agreed to settle for $15 million.
Forstmann is still active in the private equity market. Forstmann Little's most recent fund still has three investments awaiting maturity, including sports marketing agency IMG. While the firm is winding down, Forstmann himself has returned to active investment. Last year he and IMG global media head Chris Albrecht were reportedly raising a $250 million media fund.
General partner of Kohlberg Kravis Roberts and successful bidder for RJR Nabisco
?The unquestioned king of Wall Street acquisitors [?] his clout rivalling that of any in financial history.?
What can be said about the continued rise of Henry Kravis (right)? Still at the forefront of an industry which is undoubtedly coming of age, Kravis' firm has executed more than 160 transactions with an aggregate enterprise value of more than $410 billion. His firm's website boasts of the many firsts Kohlberg Kravis Roberts has executed, which include the largest leveraged buyouts in France, India, Singapore, Denmark, the UK and Europe as a whole. As of July this year it had $61 billion under management.
Being at the helm of one of the world's largest private equity firms has put Kravis at the centre of some of the most controversial deals the industry has seen. The takeover of Danish telecoms giant TDC by a consortium including KKR for €12.2 billion in 2006 incited criticism from politicians and the media of asset-stripping, excessive use of debt and a short-termist investment attitude. The ramifications of the deal are still being felt. Poul Nyrup Rasmussen, who was Danish prime minister at the time of the deal, has since become a minister of the European Parliament and has pushed hard for Europe-wide regulation of the private equity industry. New laws are currently being considered.
Forbes, which lists Kravis as the 49th-richest person in America, estimates his personal fortune to be $6.5 billion. His wealth has become the subject of protest from activists such as film-maker Robert Greenwald, who last year launched a series of short films entitled The War on Greed attacking the profits made in private equity, with Kravis, who Greenwald suggests earns more than $50,000 per hour, as the primary target.
In July 2007, KKR announced its intention to float on the New York Stock Exchange. These plans were temporarily shelved following the arrival of the credit crunch, but were resurrected in July this year. Kravis and his partner George Roberts announced they would be delisting KKR's Euronext-listed vehicle, known as KPE, merging itwith KKR and listing the new entity on NYSE before the end of 2008.
Once again market conditions have conspired against them – but at the time of going to press, the plan remains in place.
Chairman and chief executive of Shearson Lehman Hutton and financier to the management group
?Cohen looked like a tough guy, and for years that's pretty much what he was.?
The buyout of RJR Nabisco represented Peter Cohen's one attempt to transform himself ?from administrator to merchant banking prince?. The chairman and chief executive of Shearson Lehman Hutton, however, did not survive the aftermath of the deal, stepping down from his position in 1990. In 1991 he founded Republic Asset Management and Republic New York Securities ? which later had its broking license revoked by the SEC as a result of a fraud investigation ? on behalf of Republic National Bank of New York. At the same time, Cohen began working towards the launch of Ramius Capital, an alternative investment management business. Cohen formed Ramius in 1994 with former Republic New York Securities man Jeffrey Soloman and lifelong friend and fellow Barbarian, Tom Strauss of Salomon Brothers. Ramius now has $11 billion under management.
Chairman and chief executive of American Express, parent company of Shearson Lehman Hutton
?When Jim Robinson spoke, heads of state listened.?
Jim Robinson, whose statesmanlike authority is felt throughout the developments of Barbarians, retired from his position as chief executive of American Express in 1993. In 1994 Robinson founded RRE Ventures, a technology venture capital firm with $850 million under management, with his son Jim Robinson IV. As well as his roles at RRE and his continued directorship of The Coca Cola Company, Robinson sits on a host of advisory boards, including the Business Council, the Council on Foreign Relations and the Committee for Economic Development. American Express sold Shearson Lehman to Travelers Group in 1993. Travelers subsequently spun off Lehman Brothers without Shearson in 1994.
JEFFREY ?MAD DOG?BECK
Investment banker with Drexel Burnham Lambert and adviser to Kohlberg Kravis Roberts
?Although he sported a bow-tie and horn-rim glasses, Beck more closely resembled a cross between a stand-up comedian and an assassin.?
Jeffrey Beck first appears in Barbarians as a suitor for Johnson's business, and finishes the saga as one of Kravis's advisers. One defining scene sees ?Mad Dog? receive a packet of dog biscuits as a gift from Johnson, only to consume the entire packet during the course of their meeting. Soon after the RJR Nabisco deal was sealed, the Wall Street Journal published an article revealing that many of the colourful stories on which Beck had built his Wall Street persona, such as his time as a jungle fighter in Vietnam or the vast family fortune he had inherited, were untrue. Beck resigned from Drexel after the article's publication and subsequently became a money manager, handling funds for several non-US families. Beck died of a heart attack in 1995. According to his obituary in The New York Times, at the time of his death he was in the process of establishing a foundation to improve relations between the US and the former nations of the Soviet Union.
Founder ofWasserstein Perella and advisor to Kohlberg Kravis Roberts
?Paunchy, dishevelled, shirttails flying.?
Bruce Wasserstein, the master tactician who had torn the heart out of First Boston's mergers and acquisitions team when he left with Joe Perella to found their competing boutique, was hired by Kravis supposedly just to ?take him[Wasserstein] out of circulation? in the RJR deal. After Barbarians, Wasserstein Perella suffered as the merger boom turned to bust, and in 1991 a profile in GQ magazine proclaimed ?it's over for Bruce Wasserstein?. However, he subsequently sold the firm to Dresdner Kleinwort in 2000 for $1.37 billion, pocketing a personal profit of $600 million. He is now chief executive of investment bank Lazard, and with 11 percent of the stock, is the largest shareholder in one of the few institutions on Wall Street which look relatively safe from harm. He is also the manager of a self-titled media-focussed private equity fund with around $2 billion under management.
Partner at Skadden, Arps, Slate, Meagher and Flom and counsel to the special committee
?Holier than Caeser's wife.?
The Skadden Arps attorney was charged with guiding RJR Nabisco's special committee through the company's bid process, and his career since Barbarians has not wavered. On Skadden's website the list of deals in which Atkins has been involved includes some of the most significant deals of the last 20 years. Highlights are: Time's $12 billion acquisition of Warner Communications in 1990; Sprint's attempted $129 billion merger with MCI Worldcom in 2000; Blackstone and consortium's $17.6 billion proposed acquisition of Freescale in 2006; this year's attempted $150 billion takeover of Rio Tinto by BHP Billington; and last but certainly not least, this year's $1.2 billion acquisition of Bear Stearns by JPMorgan Chase.
Chairman of Salomon Brothers and financier to the management group
?Ross Johnson, who knew him from Standard Brands days, called Gutfreund ?Old Potatohead?.?
John Gutfreund's coronation as ?King of Wall Street?by Business Week in 1985 is better chronicled in Michael Lewis' novel on bond trading, Liars Poker. In Barbarians he leads ?the sick man of investment banking?, Salomon Brothers, as it wades into the RJR deal. Gutfreund was forced out of Salomon in 1991 following the firm's involvement in a treasury bond auction scandal to be replaced by one of its investors, Warren Buffett. Gutfreund reappeared on Wall Street in 2001 as managing director of small brokerage C.E. Unterberg, Towbin on a lowly $100,000 salary. Today he retains this position, as well as leading his own investment bank, Gutfreund & Co, and has been an active commentator on the financial sector's current turmoil. William Strong, the young Salomon banker who pushed the bank into the RJR battle, left the company in 1993 for Morgan Stanley, where he now sits as vice chairman.
Partner at Davis, Polk &Wardwell and legal counsel to the management group
?A rarity among Wall Street lawyers.?
Barbarians opens with the Davis Polk attorney doing all he can to dissuade Johnson from initiating the process which will ultimately see the RJR Nabisco boss lose control of his company. Described in the novel as ?a curious choice?to advise the management team, given his lack of tactical merger experience, Steve Goldstone (right) actually emerged as chairman and chief executive of RJR Nabisco in 1995. Burrough and Helyar note that the job ?amounted to presiding mainly over the demise of a once-mighty company?. After selling Nabisco to Philip Morris in 1999 and divesting RJR's international concerns, Goldstone retired from the role in 2000. Since then, like Johnson, he has been heading a private investment company, Silver Spring Group.
Co-founder of Robinson, Lake, Lerer & Montgomery and public relations adviser to the management group
?No ordinary flak.?
Having pulled the strings of the media throughout Barbarians, Linda Robinson is still very much involved in the world of public relations. She is chair and chief executive officer of Robinson Lerer & Montgomery, a New York PR firm that she founded in 1986. The firm is now owned by the London-based media holdings giant WPP. Sir Martin Sorrell's firm acquired RLM as part of a wider deal for media group Young & Rubicam, which had bought RLM in February 2000. Aswell as chairing RLM, Robinson sits on the boards of Revlon and Black Rock.
Financial consultant and adviser to the management group
?Benevento and Sage were throwing around numbers in the vicinity of $110 a share, but as usual, no one listened to them.?
Like attorney Steve Goldstone, Frank Benevento is portrayed in Barbarians as an ?odd choice?to be advising on such a deal as the buyout of RJR Nabisco, having accrued just four years ofWall Street experience at Lehman Brothers. As well as chairing his advisory firm Benevento Financial and merchant banking group Hemisphere Investment Corporation, Benevento was until 1995 a general partner of the $126 million private equity vehicle, Energy Recovery Fund, which reportedly generated 30 percent compounded returns over its seven-year life. In 1991, lawyers investigating excessive expenses charges made by fund managers to Seattle's State Investment Board cited Energy Recovery Fund's $1.7 million legal fees as in need of ?aggressive monitoring?. Since then Benevento has also co-founded a media technology company called Individual Network.