Book : Foreword by Michael Lewis
It's a pleasure to introduce this richly
informative and admirable book, which offers not merely a glimpse
but clear wide open view of the high peaks of finance.
The Buyout Book is really two books in one. The first part is an instruction
manual for well-to-do people who have decided they would like to become really,
really rich. The author, Rick Rickertsen, wouldn't put it quite that way, I'm
sure. Like many of the most successful businessmen he believes that businessmen
are more likely to get rich if they don't spend all their time thinking about
getting rich. If asked, he would probably say that he's written an instruction
manual for corporate executives who have grown tired of the upper tiers of wage
slavery, and have summoned the nerve to seize control of their companies and
their destinies. The money is merely symptomatic, a pleasant side-effect, of
that admirable willingness to take risk. And perhaps he's right.
Still, as everyone who has watched the Internet Boom knows, the best way to get
rich is to have equity in a successful company, and this book helps them to do
it. Happily, as the author points out, history is currently conspiring with all
potential readers. Many industries are following the example of the Internet
Boom, and finding ways to give equity to their employees, or risk losing them
to Internet companies. As Rickertsen puts it, "All companies will have to
become Internet companies if they want to compete for talented managers." And,
of course, the best way for a manager to get a big piece of equity is to buy
the company from the current absentee owners.
The trouble is: how exactly do you do this? Although low finance has been denuded
of much of its mystique and complexity, high finance remains opaque. What, praytell,
is a 83(b) election? How do you write a confidentiality agreement? Why does anyone
work for a commercial bank, anyway? Only insiders know how this stuff works.
Enter The Buyout Book, and its author, who, as a leading buyout expert, is himself
an insider. In clear, simple language he brings the complexity of high finance
to its knees, and leaves it begging for mercy.
In the process, it would seem, he undermines his own interests. After all, one
of the advantages long enjoyed by capitalists in their dealings with entrepreneurs
is that the entrepreneurs don't fully understand what capitalists do, or how
they think. This book corrects that deficit. It teaches people who seek capital
how best to deal with the people who control the capital. This raises an obvious
question: why would a buyout expert write a book to help ordinary corporate numbnuts
get the best possible deal from buyout experts? At first glance the book appears
an act of self-destruction; it's as if the U.S. government sent a crack team
of American physicists to China, to help the Chinese fine tune their long range
nuclear missiles. There are, I think, several reasons.
I know the author well, and so I also know that he is at least partly motivated
by warm feelings for people who take risk in life. He is one of those rare people
who actually feels good when others do well for themselves, especially if they
have stuck their neck out in the process. Put another way: he likes to see people
stick their necks out, so that he can feel good for them when they are rewarded
Altruism, however, is never a satisfactory explanation for the behavior of a
successful businessman, even as nice a one as Rick Rickertsen. My guess is that
he has a narrower motive, too. The business world is changing. Increasingly,
it favors people who actually do things at the expense of those who lend them
the money to do it with. Sooner or later, the author might have figured, someone
was going to explain everything to the guy across the bargaining table, and so
it might as well be him, lest he appear to be just another greedy capitalist.
Yet there is still a third motive at work here, and it is perhaps the most powerful:
the simple desire to make sense of one's experience. Any man who has lost millions
of other people's money by sinking them in a company run by a man who wears pinkie
rings and hangs stuffed marlins on his wall needs the loan of an ear. He has
had a wonderfully traumatic experience; he needs an audience to share it with.
See Chapter 3, Avoiding Deal Hell for the details.
As I said that the Buyout Book was really two books in one, and it is. The second
book is a vivid description of the world through the eyes of a capitalist. This
may prove more useful to capitalists than to those who seek to use them, but
it will be a pleasure to both, and to anyone else who likes a good story, well
Michael Lewis is the author of several best-selling books, including The
New New Thing and Liar's Poker (#1 New York Times national
bestseller in both hardcover and paperback), based in part on his own experience
working as an investment banker for Salomon Brothers. Lewis is currently a contributing
writer to the New York Times Magazine, a columnist for Bloomberg, and
a visiting fellow at the University of California at Berkeley. His freelance
writing appears in places including The New Yorker, Slate and Foreign Affairs. Michael
Lewis has served as editor and columnist for the British Weekly The Spectator and
as senior editor and campaign correspondent of The New Republic. He
has filmed and narrated short pieces for ABC-TV's "Nightline" and has
hosted a series on presidential politics for National Public Radio. He holds
a B.A. from Princeton and an MSc in Economics from the London School of Economics.
He lives in Berkeley with his wife, Tabitha Soren, and their daughter.