In the autumn of 1988 a tobacco and biscuit company changed hands for about twenty-five billion dollars, and the story of how it happened became one of the most successful business books ever written. It had ego, aircraft and a boardroom war conducted in public. What it did not have — because it was not what the story was for — was the arithmetic.
How does borrowed money make a buyer rich? Where does the return actually come from, once the part anybody would have received is taken out of it? What do the fees take, in total, and from whom? And what happens to the company afterwards — not in the six weeks of the deal, but in the twenty years after it?
BORROWED TIME tells the story of the leveraged buyout from the bootstrap deals of the 1960s to the industry that now owns a large share of the private economy, and then takes the transaction apart with a calculator.
WHAT IS INSIDE
The history, in five chapters: the balance sheet with slack in it, the arithmetic of borrowed money, the bond market that had to be invented, and six weeks in 1988 that made all of it famous.
The anatomy, in seven: the exact three-way decomposition of a buyout return and which part could be called skill; the full fee stack on a billion-dollar transaction — about $240 million, roughly half of it paid whether the deal succeeds or fails; why a reported rate of return can be raised by borrowing rather than by earning; the dividend recapitalization, which is the whole structure distilled; and who is carrying the risk that makes the return possible.
The companies, in six: Toys "R" Us, which could service its debt or rebuild its stores and could not do both; Energy Future Holdings, the largest buyout ever completed and, underneath, a leveraged bet on the price of natural gas; the healthcare and housing research that is strong enough to be uncomfortable; the retail decade; the roll-up that has replaced all of it — and, at equal length, the transactions that plainly worked and why.
The system around it: a tax deduction written in 1918, the pension money that funds the equity, and the Delaware rule that turns a high enough offer into an obligation.
And a verdict written so that a reader who disagrees can see exactly which finding they disagree with, followed by the reforms that would change the incentives, costed, with an estimate of how each would be avoided.
WHAT MAKES THIS BOOK DIFFERENT
Every calculation is printed rather than summarized. Every measured finding is given with its size and an indication of how firmly it stands — and Appendix F states, claim by claim, what is established, what is contested, what is arithmetic and what is the author's own, together with five findings that would change the verdict.
It is not an exposé. Nothing here alleges wrongdoing except where a court or a regulator has found it. The argument is structural: the transaction allocates the gains to one set of people and a large share of the risks to another, and the two sets barely overlap.
It is not a defence either. Chapter 17 is devoted to the buyouts that succeeded, because a book about an industry that describes only the failures is a brochure with the sign reversed.
EXTENT
313 pages · about 69,400 words · 95 figures · 100 tables · 23 formulas · 79 worked examples · 116 propositions · 12 appendices, including all the arithmetic on six pages, eight companies side by side, a full glossary, a method for working out any transaction yourself from public filings, and the whole book in twenty-four sentences.
FOR
Anyone who read the famous account of 1988 and wanted the numbers; trustees and investors who are shown private fund reports and expected to have a view; lawyers, bankers and executives on any side of these transactions; students of corporate finance and business history; and anybody who has watched a familiar company close and wanted to know why.

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