Barbarians at the Gate :: Business Management Studies

Barbarians at the Gate Barbarians at the Gate is a story of the largest takeover in Wall Street history. Ross Johnson turned chief operating officer of a company, which was the product of three merged companies, Standard Brands, RJ Reynolds, and National cookie Company (Nabisco). The newly formed companys, called RJR Nabisco, stock began to fall and never recover. Johnson along with Shearson executives planned a leverage buy give away (LBO), in which a securities firm firm (Shearson) would borrow money from banks and buy up all the large shares from the stockholders to turn the company private. The problem with this is that the company would be put into danger of otherwise companies that can outbid the parent company, which would lead to a takeover. The higher(prenominal) the bid would lead to a bigger debt and lesser profits for the owners of the firm. matchless of the six accounting principles that was discussed in the book was the expense principle, which helps deter mine action of a company by measuring the outflows and inflows of resources. The matching principle guides the cognizance of expenses, so good matching will ultimately lead to a better measure of performance. When KKR exercised due diligence of RJR Reynolds, they could not figure out other uses of cash in the statements obtained. The initial projections they had obtained from RJR Nabisco was a heading other uses of cash. Beside it was a row of figures stretching out ten familys, each year ranging from 300 to 500 million dollars. Was it cash flowing in or out? Should he add it? Subtract it? Ignore it? (Barbarians 369).