Buyout 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 for it.

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 told.

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.