Junk Bond Fees in Barbarians at the Gate
"To Forstmann the junk bond was a drug that enabled the puniest acquisitors to take on the titans of industry, and he held it responsible for twisting the buyout world’s priorities until they were unrecognizable. No longer, Forstmann believed, did buyout firms buy companies to work side-by-side with management, grow their businesses, and sell out in five to seven years, as Forstmann Little did. All that mattered now was keeping up a steady flow of transactions that produced an even steadier flow of fees—management fees for the buyout firms, advisory fees for the investment banks, junk-bond fees for the bond specialists. As far as Ted Forstmann was concerned, the entire LBO industry had become the province of quick-buck artists."
I get advisory fees for the IBs but I fail to understand how junk bond fees and management fees could work in the transactions. Any Monkeys?
Bump!
Ted Forstmann ("Da Frostman") was quite the character especially after reading "Barbarians at the Gate" it led to my conclusion that this man was on some serious dope. The guy was wired because he wanted RJR to side with rather than Henry Kravis. He was the enlightened private equity player. But anyway, I would love to dwelve further into Junk Bonds but I rather ask Milken at a Bloomberg interview or revisit the Eightieeeeesss
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