1980s Leveraged Buyouts

About 1980s Leveraged Buyouts

The 1980s saw a wave of leveraged buyouts, where investors used borrowed money to acquire companies. Michael Milkens junk bond innovations at Drexel Burnham Lambert financed hostile takeovers. RJR Nabisco was bought for 25 billion in 1988, the largest LBO until 2007. The era was depicted in the book and film Barbarians at the Gate. The buyout boom enriched bankers but loaded companies with debt. Many LBOs ended in bankruptcy. Milken went to prison for securities fraud. The LBO model returned in the 2000s with even larger deals before the 2008 crisis ended the party.