The exit playbook for owners of $2M-$50M companies and businesses with $1M+ in EBITDA. Get your free copy →

In October 1988, the CEO of RJR Nabisco tried to buy his own company for $75 a share.

Six weeks later, it sold for $109 a share. He was not the winning buyer.

That six-week saga became Barbarians at the Gate, the most famous deal book ever written.

On the surface, it has nothing to do with a Main Street deal. Private jets, egregious corporate spending, and a $25 billion price tag.

But strip away the spectacle, and there is a core lesson that applies to every M&A deal: competitive tension changes the selling price.

The story: Ross Johnson was a salesman who charmed his way to the top of one of America's biggest (and most random) consumer companies: Oreos, Ritz crackers, and… cigarettes. He ran it like a personal kingdom with pro golfers on the company payroll and bougie Manhattan apartments for executives.

RJR’s stock price was stuck, so Johnson decided to take the company private with a management buy-out. He offered $75 a share, a $17 billion valuation. He assumed the board would wave it through since he was buddies with them all. And, at least in the market’s opinion, the business wasn’t worth all that much anyway.

Narrator voice: “Ross Johnson was incorrect.”

What happened: The board (by law) was required to form a special committee and run an auction process.

KKR (one of the most famous private equity firms) could smell the blood in the water. The other sharks (private equity groups) also started to circle. The bids climbed to Ross’ horror: $90, $100, $106.

KKR eventually won at $109 a share, roughly $25 billion. The final price was 45% higher than the opening offer.

Keep in mind, this is the exact same business (this was only a six-week process). The only thing that changed was buyer competition.

What this means if you’re planning to exit your business:

The first offer tells you someone wants your business. Their second offer tells you what they think it’s worth.

Thinking about selling your business? A confidential, no-pressure conversation about what yours is worth and what a sale would actually look like. Schedule a call →

This two-year-old pest control brand is asking $11 million on $2.65 million of EBITDA. The 4.1x multiple looks cheap, but with one SKU driving 85% of sales. My biggest question: why sell now?

see how your business would score → take the free Exit Audit

fitness challenge: the foundational five

At the gym, 5 rounds:

Rest 2 minutes between rounds.

founder challenge: energy drainers vs. energy gainers

Draw a T chart on a piece of paper. Left column: the work tasks that drain your energy. Right column: the ones that give you energy. Then eliminate one drainer this week by delegating it, hiring for it, or cutting it entirely.

A business built around your energy gainers is easier to grow—and a lot easier to step away from.

want a full week of these? try the free 7-day founder fitness challenge →

every second counts