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By George P Baker and George David Smith, Cambridge, UK Cambridge University Press, 1998, 257 pp., $24.95
A good deal of merger and acquisition activity has received a bad press, with most of the "financial engineers" involved lumped together as insensitive corporate raiders. For a different perspective, Professor George Baker of the Harvard Business School and Professor George David Smith of the Stern School of Business at New York University present a more sympathetic view, using as an example the widely known firm of Kohlberg Kravis Roberts & Co (KKR). Familiar names associated with KKR's activities include Houdaille Industries, Beatrice Companies, RJR Nabisco and Safeway.
KKR originally retained the authors to document the details and patterns of nearly two-decades of its investments in a systematic fashion for the benefit of its younger generation of professionals and its widening circle of investors. Baker and Davis then persuaded the senior KKR partners to permit them to write a more complete history for public consumption. The authors wanted the book to be policy oriented, presenting the leveraged buyout (LBO) as a example of economically productive financial engineering. Complete access to KKR's files and personnel was obtained. Choices of subject matter, themes and interpretations were left entirely to the authors. No censorship was involved. The authors agreed that KKR could review the text and have the opportunity to offer corrections of factual errors and keep proprietary information confidential. This relatively short, readable and interesting book is the result.