The Predators' Ball: The Inside Story of Drexel Burnham and the Rise of the Junk Bond Raiders

by Connie Bruck

During the 1980s, Michael Milken at Drexel Burnham Lambert was the Billionaire Junk Bond King. He invented such things as “the highly confident letter” (I’m highly confident that I can raise the money you need to buy company X) and “the blind pool” (Here’s a billion let us help you buy a company), and he financed the biggest corporate raiders—men like Carl Icahn and Ronald Perelman.
 
And then, on September 7, 1988, things changed. The Securities and Exchange Commission charged Milken and Drexel Burnham Lambert with insider trading and stock fraud. Waiting in the wings was the US District Attorney, who wanted to file criminal and racketeering charges. What motivated Milken in his drive for power and money? Did Drexel Burnham Lambert condone the breaking of laws? The Predators’ Ball dramatically captures American business history in the making, uncovering the philosophy of greed that has dominated Wall Street in the 1980s.

Genres: Business, Finance, Nonfiction, History, Economics, Law, Buisness

400 pages, Paperback

First published January 1, 1988

Reviews

[Frank Stein · Rating 4 out of 5]

Of all the financial industry tell-alls of the 1980s, this has to be the most detailed and comprehensive. While writers like Bryan Burroughs, in books like "Barbarians at the Gate," focused on personalities and relationships, Connie Bruck peaked inside the intricate system of junk bond financing that Michael Miliken pioneered at Drexel Burnham Lambert, and explained how such subtle innovations as refinancing bonds and private placements led him to become the most richly rewarded man in the world, and then, of course, a convicted felon.

Bruck presents an admirably balanced picture of Milken, as both a driven genius and an occasionally underhanded dealer. At first, one cannot read the book without admiring Milken's intelligence. Taking the research of W. Braddock Hickman from the 1940s, Milken showed his bosses how buying large, diversified portfolios of low-quality corporate bonds, i.e. "junk bonds," would allow them to outperform the competition. Even if a few defaulted, he argued, the high interest on the whole would be greater than supposedly safe triple-A bonds. More than that, Milken, son of a Los Angeles accountant, had an uncanny ability to divine good companies from their balance sheets and statements, and very few of his supposedly junk bonds defaulted. This made him and Drexel the fastest growing financiers in the country. After building up a dedicated cadre of thrift institutions, wealthy individuals, and mutual fund clients, all of whom would buy any bonds Milken offered on pure faith, Milken then transformed that vast reservoir of cash a into a tool to raise money for hostile takeovers. These junk-bond financed raids allowed such previous nobodies as Nelson Peltz of Triangle Industries to take over National Can Company, or Ronald Perelman and his Pantry Pride supermarket chain to take over Revlon. As the section is titled, pawns captured kings. Soon Milken became the center of a vast web of money and companies that funded takeovers, purchased stocks, and distributed vast funds across the nation. He also became a walking conflict of interest who accumulated loads of insider information from his diffuse clients. Then, a U.S. Attorney named Rudolph Guiliani and a crusading SEC finally put him in prison for two years, fined him billions, and pushed Drexel into bankruptcy.

Bruck is best in the weeds. She relates how Milken's "stripping" of stock warrants (originally requested as "kickers" to help sell supposedly bad bonds) from bond offerings, and the placing of such warrants and stocks with close friends who were at his beck and call, allowed him to accumulate large positions in companies before filing an SEC 13D form admitting to at least 5% ownership, and thus gave him the nebulous power to potentially threaten almost any CEO in the country. Few knew how much potential stock he controlled. Bruck also shows how Milken's 3(a)9 deals, that is, private placements of bonds that did not have to register with the SEC, but, contrary to Milken's actual practice, which were not supposed to be quickly traded, allowed him to create sudden streams of funds to use against takeover targets. Also, Bruck points out how Milken's "highly confident" letters, stating merely that his firm strongly believed it could raise, say, $100 million in a few weeks, were enough to make many corporate chieftains quake in their loafers and then to make them offer him large payouts to stay away from their companies. Although he didn't originate such "greenmail," he made it ubiquitous.

All this legerdomain had wider consequences, since it was part of a vast assault on the corporate establishment, and, as Bruck shows, this largely an attack by Jewish outsiders on Eastern WASPy managers grown fat and comfortable atop aging giants, giants that Milken thought needed to be paired and slimmed. The amount of clear antisemitism among defenders of the old order is fairly shocking here, as is the vision of Milken and others to reshape America through junk bonds. And though Bruck supports much of this reshaping, she knows that Milken flew too high, too fast, and his collapse is such a classic tale of hubris gone awry that it would be prosaic almost to describe it. Still, the consequences of Milken's vision, for better and worse, live on. Bruck effectively shows how corporate America is living in the world one former felon created.

[May Ling · Rating 4 out of 5]

The author did an immense amount of work and packed it into a piece that reads fairly well for a historical account. This is one of the more important stories to understand in light of today's issues. The rise of the Junk Bond raiders isn't just the rise of the Junk Bond era, it is the rise of how this type of debt made it to market and took off. It is a story that explains what- despite all of the news in the press against sub-prime - the purpose of this debt is (outside of lining the pockets of deal makers).

I give the book huge kudos for it's account and agree that it should be on the reading list for all those trying to understand the market dynamic.

[MasterSal · Rating 4 out of 5]

This is a classic in the business writing world which was surprisingly readable from a writing perspective. We follow the story of the rise of Drexel and the junk financing market which eventually lead to hostile M&A raids and a culture of corporate raiders. This market transition took place in the 1980s with a fraud charge being files against Drexel and Milken in the late 1988.

I was actually surprised at how much I enjoyed the read - this could be because I understood all the jargon (being in the finance space). The book is quite detailed with lots of names and details about the inner working of the deals Drexel did and market movements. This is definitely not to beginners who will be lost in the litany of names and details.

This book is definitely not a history per se but more contemporary reportage. This is important to remember when reading it because even keeping that top of mind, I sometimes found myself getting annoyed at why more “context” and history was not given. Then I had to remember that current events are not written up the same way.

Builds a case that Drexel and corporate raiders broke the law but also created a culture and market which was an issue. However, the book’s underlying assumption is that this is as an aberration of specific personality issues (“it was greed and fraud”) and not a feature of the system. After Enron, mortgage shenanigans, sovereign wealth issus etc I so find the entire veneration of the system quite ironic. The “good old days were better before the raiders got in”. Yeah sure whatever … 🙄🙄

It was not that the raiders dirtied the pool - the pool was quite dirty to begin with. This book’s skepticism is not for the system so I find the short term focus on the “evil raiders'' quite funny. And the quotes from these Wall Street types talking about these “upstarts” and the “gutter” - OMG 😆

The book took me some time to get through and after a few weeks, I was a bit bored of the book. I did lose the plot a bit - this could be because of the age of the book and the fact that this story would have been common news while it was history for me.

However, in the end I did enjoy this quite a lot. I learnt a lot of history and even though it was a little long I got what the author was trying to do. As she put it:

“Any one of the above [transactions done by Drexel], by itself, might seem an offence which … could be plea-bargained away without severe sanction. But seen in concert - and in concert is how they must be seen if any true sense of Milken’s machine is to be grasped - these individual acts take on different dimensions. … indeed, it seems plain to this writer that if the above … are not worth prosecuting, then securities laws are not worth passing. … it is difficult for this writer to imagine a manipulation of the securities markets that is more broad, more powerful or more frightening.”

So while I am docking the star for the latter half where my mind meandered, this book is still worth picking up. Yes it will not be complete history but I found it fascinating.

[E. Gumz · Rating 5 out of 5]

Though the amount of time it took me to read Connie Bruck’s The Predators Ball could be interpreted as a comment on its relative digestibility, it should really be viewed as an reflection of how Bruck ardently refuses to waste words. This is not an overwhelmingly long book, but it is a dense one. This book represents a successful effort to do what many financial writers attempt with only marginal results: combine a story of highly complex characters, each with their own motives, histories, and perspectives with a factual, detailed, and thorough report on the financial realities of the time, all while maintaining narrative consistency and staking an original opinion on the subject. Bruck grants Milken his credit where it is warranted, but simultaneously demonstrates her willingness to explore the dubious dealings where colossal profits appear to blur the line between legality and illegality. Bruck also succeeds in differentiating one chapter from another in more ways than simply by timeline, another frequent shortcoming of the genre. After the results of the bargain in '89, a sequel seems justified - but for the past 37 years, Bruck's work here has stood to beg the question of where the line between extraordinary profits shared among friends crosses into legitimate securities fraud. Five stars.

[Jack Good · Rating 4 out of 5]

“You know, horse thieves used to be hanged”

And what a band of horse thieves this was! The Predators Ball was a richly detailed recounting of the rise and fall of Michael Milken and the firm he worked for Drexel Burnham. It was nice to do a deeper dive into the firm that was the key to KKR pulling off the RJR Nabisco takeover. As boring as banking & finance are, the 80’s seemed like a wild time for an industry that was rewriting the rules of American corporate life as we knew it.

“If somebody could prove to you that the bricks of that cathedral could fetch a higher price in the market, would you dismantle it?”

The book dives deeper into the specific mechanisms Milken used to transform the bond market, which allowed him to assume the role of apex predator in the takeover world. He built an empire breaking up companies, buying and selling their pieces, and installing loyal members of his cadre into roles of influence to maintain his power.

An interesting note on the “great man” theory, Milken single handedly created one of the largest financial markets that competitors tried to imitate and copy (to little success) until the government came crashing down and convicted Milken of insider trading and fraud. This book also continues the little rabbit hole I’ve gone down exploring how individuals have shaped the corporate landscape of this country and the consequences of companies being bought and sold.

[Giulio Gilardi · Rating 2 out of 5]

DNF.

I usually love these books, but this one was not engaging at all. Milken was clearly a genius and the book could have been way more interesting. I’m sure that if Michael Lewis had written this book, it would have been a 5 star for me.

[Jessica Blitz · Rating 3 out of 5]

Read Den of Thieves instead

[Pat Murphy · Rating 3 out of 5]

A book I put on my to read goodreads list a few years ago. It tells of the days of Mike Milikan and the company Drexel who were stretching the limits of bond underwriting and company takeovers, hostile, and not. I found believable, which it better be, it's non fiction. The publish year was 1988, so it's not news. But, I still think I learned a little. If I had it to do over, I would not have put it on my list, but I'm anal, sooooooo.

[Ben Hicks · Rating 5 out of 5]

One of my favorite books of all time, about the rise and fall of Mike Milken and the creation of the HY bond market. Must read for anyone in/aspiring to finance.

[Jon Morgan · Rating 3 out of 5]

As the tale of one person's empire building, innovating whole new realms while also transgressing ethical and legal norms, this text has a great deal in common with Robert Caro's The Power Broker. This book is a probing look at the mechanics of Michael Milken's seizure of power in corporate finance. That said, there are two faults I have with this: first, that the action described takes place in a little over a decade; the events seem to pile on top of each other, giving little sense of chronology. Secondly, and probably more importantly, the action takes place solely at the level of shareholders and board members - the effects of Milken's action on, say, company employees or regulators is glossed over.

If the author is interested, I think she should consider another update on Milken's life since his ban from the securities markets, in which he has expanded to the world of philanthropy, with his will to power and self-mythologizing still intact.

[Navdeep Pundhir · Rating 2 out of 5]

I picked this up with a lot of excitement and anticipation for it was one of the classics of the 80s, documenting the rise and rise and subsequent fall of Michael Milken and his Junk Bond empire. One thing which I believe has caused me to rate this book so low is 1. It's quite tedious to read and one has to literally keep oneself awake somehow to turn through the pages and 2. I've already read Den of Thieves which is like the super Star classic on this subject and is much more detailed.
The book as I mentioned is difficult to comb through and loses a lot of its focus in its attempt to cover as many things as possible. Anyways, it must have been a rage thirty five years ago for it was the first on this subject.

[Toni Kokkonen · Rating 4 out of 5]

Maybe 3,5 stars. In many ways interesting and grabbing, somewhat of a financial thriller stuff for those really interested in these topics. However these details go seriously deep into minutiae and details if individual junk bond issues and how much so and so as paid for something. These would probably have been quite a bit more interesting when this all was news, but as a retrospective after 30 years since the things have happened, these details are a bit much.

Still a great look into the crazy 80s LBO and management buyout mania that for example Barbarians at the Gate is about. Learned a bunch of new stuff and the book was fantastically written. Just a bit long.

[Terence · Rating 3 out of 5]

I enjoyed 'Barbarians at the Gate' and wanted to read something like it. Unfortunately, this book doesn't compare.

It is a collection of stories and the chapters largely have to do with certain people that benefitted from Michael Milken's efforts. It doesn't have a strong story arc and seems to leave us in suspense at the end.

Okay book but there are better ones.

[Daniel Vargas Sotomayor · Rating 5 out of 5]

Great book

Great financial history book. All about the genesis of the global HY market. Well researched and written despite luck of collaboration from the main character.

[Jeb Burnell · Rating 3 out of 5]

I had to shelve this one early. Gave up with ~60-70 pgs left

[Austin Gaghadar · Rating 4 out of 5]

This book was a valuable resource to learn about some major names in finance, including both the creators of junk bonds and the activist users. Individuals such as Nelson Peltz and Carl Icahn who continue to make headlines more than 30 years after the publication of the book, a testament to the legacy of Milkin's insights. The author presented a compelling case for the market opportunity spotted by Milkin and the struggles that he had to go through to make it a reality, highlighting both the strife and the spoils. While critical of many of the decisions Milkin made, the company he kept and the approach taken to certain business transactions, I thought the author maintained a rational and generally detached tone throughout. I found this made the book more enjoyable to read and helped support the credibility of the author. As someone who knew only broad strokes with respect the goings-on of financial markets at this time, this book was very effective in filling in the details. Bruck was definitely not shy about adding detail to the book, an element I generally enjoyed, in order to better understand the transactions being done but at times made the book more difficult to read. Another aspect that in my opinion made the book difficult to read at times was the way the timeline jumped around. It was helpful when years were explicitly referenced, but as someone who was not alive during this time, I found it very difficult to understand which events were happening contemporaneously or close in time. The stories of excess made this book very entertaining while the focus on the market and the key actors within it made the book enlightening, allowing me to learn a lot about this time in markets, and about the core financial products covered.

[S.H. Harrison · Rating 4 out of 5]

I learned about this book from an anecdote shared by Michael Lewis in "Liar's Poker": one of the subjects of the book offered Connie Bruck $1,000,000 NOT to publish it. After reading through it, I can understand why: this is an unflattering look at the Wall Street raiders of the 1980s, shining the cold light of day on their supposedly magnificent business accomplishments (most of which were based on greed, stupidity, and deliberately unpatched loopholes in government regulations of Wall Street). The men portrayed here aren't swaggering, handsome, steel-jawed Gordon Geckos, but overgrown narcissistic jocks hiring prostitutes to try to make their annual dinners less awkward (and failing!), fighting to screw over a Wall Street Establishment that wasn't much better. And during their clashes, ordinary people suffered.

Bruck doesn't spend a lot of time moralizing, just depicting the various schemes in clinical detail and letting you be the judge. In some ways, "The Predators' Ball" is closer to a true crime novel than a history of Wall Street, and it's all the better for it. Highly recommend.

[Chris · Rating 3 out of 5]

The Skinny: Effectively written story about the rise of Drexel and its "messiah" Michael Milken. Full of detail but dry at times, it is a fairly gripping account about one of the most unique chapters and characters of 1980s finance.

The Good: Full of information and accounts for so much of what was going on in the era. Strikes a balanced tone between both the positive and nefarious motivations for Milken. I quite enjoyed the chapters describing Milken's role as an impetus in the rise of other big players (I especially like how the book basically makes fun of Nelson Peltz).

The Bad: I think the details are also a con just given it has a lot of side stories that hurts the overall flow. In a way it bounces around and there is a good bit of non-layman financial concepts. I am not sure if newer editions have this added, but it would be great for the afterword to be expanded to cover what happened

[Priscilla Reiss · Rating 4 out of 5]

It requires a great deal of talent to make a comprehensive investigative reporting book as compelling as this. The Predator's Ball is mostly focused on one man - Michael Milken, known for having cultivating the multi-billion dollar market for "junk bonds"- but it is just as comprehensive and engrossing as a book like “Barbarians at the Gate”.

Given the amount of ground Bruck has to cover, this is well done. I did find it hard to follow at some points, chronologically, particularly towards the end of the book when she covers the events 1986-1989.

This is a canvas portrait of the world of finance in the 80's; it includes a lot of background on key players, the big deals (literally and figuratively), and the industry culture. It felt like a pretty fair depiction: whether good or bad, everything was laid bare. The author does inject her personal opinions on some matters, but leaves a lot of space for readers to make their own judgments.

[Dio Dwianto · Rating 5 out of 5]

After reading James Stewart's Den of Thieves about the insider-trading scandal, I was sufficiently intrigued to read another one revolving around the same period of time. Here, Drexel and Mike Milken took center stage. The interviews for the book have started prior to Ivan Boesky's sudden plea bargain, which was the catalyst for Drexel's downfall, so it's really interesting to see the inside perspective of Drexel during the apex of its power when people were more inclined to speak candidly. Milken might be a crook, but you can't help but also admire his genius. For those who's interested, this book also has a nice balance of narrative and explanation of the financial tools and gimmicks engineered during those era.

[David Allen · Rating 3 out of 5]

I feel like this book had an identity crisis between research journal and entertaining read. I really expected to learn about the rise of junk bonds and their use in predatory takeover attempts, along with how Milken/Drexel became the nexus of this and rose in power. However, my enjoyment was dramatically diminished by the incredible amount of details and name dropping that were included. The minutae made the actual story feel more disjointed and the cast of characters unnecessarily large for the purpose of my reading.

If I take the perspective of a research paper I can appreciate these details and it was well done, but I feel like they made it unnecessarily tedious to read and harder to follow...just like a scientific study.

[Spencer Willardson · Rating 4 out of 5]

I picked up this book in a free book pile at the university. It was really interesting. The level of "fakeness" in the finance side of the economy is astounding. It was an interesting read not long after reading The Unwinding: An Inner History of the New America.

It was also "fun" to see appearances by both Rudy Giuliani and Mitt Romney in the afterward of the book. Rudy was the prosecutor who was going after Milken. Romney was involved in a deal that used 50 million dollars of junk bond financing through Drexel.

I didn't come away with warm feelings for the finance sector.

[Travis · Rating 4 out of 5]

Well-written contemporary account of the rise of the junk-fueled takeover boom and Milken at its center.

Interesting to read in hindsight (similar to Barbarians at the Gate) given all that has transpired in the following decades as the rebranded private equity industry has become so ubiquitous. Major characters like Apollo’s Leon Black are bit players here. Global financial giants like KKR are boutiques.

My one complaint is that it ends rather abruptly (although the last chapter is great). Just wish it covered more of the downfall. Milken is untouched by the end of the book, even though he ends up in prison. Can’t complain too much though because it’s not retrospective as others have mentioned

[Steven Jones · Rating 3 out of 5]

Going back to read up on wall street is can be instrumental to understand what is going on today in the world. Getting an understanding of Michael Milken and the bankers of his era is crucial. This book does have all of the necessary information however at times the writing is a bit stilted. It jumps and also seems very terse without the modern story telling in business stories of this type.

This book though was overall closer to a 4 star until the afterward where the author really tried to show that she didn't editorialize but it ended up having the opposite affect on me, making me question the facts set forward before.

[Tom Wile · Rating 4 out of 5]

The story of junk bond salesman, Michael Milken from the late seventies and 80’s. He basically created the (what is now called) high yield bond and a financial move called a ‘leveraged buy out’ where management of a company borrows money at a high rate to take over the company. Milken’s activities changed the corporate landscape in the 80’s but all that power led to an organization that more closely resembled the mafia than an investment firm.

Funny what can happen. Rudy Giuliani’s investigation into Drexel and Michael Milken, led to the firms downfall in 1988. In 2020 Donald Trump pardoned Milken after years of White House lobbying by Milken’s powerful friends including Ted Turner.

[Andrew · Rating 5 out of 5]

I personally found this book extraordinarily educational.
My personal reading experience viewed the author utilising a depicting of real events to provide a platform to introduce; Wall Street, bond markets, speculation & trading, however, the insight into the evolution of the distribution of ownership-management; from founder - to inherited - to outsourcing, was the topic of which gripped me most noticeably, introducing the insight of varying mindsets in regards to a managers relationship with their responsibilities & the effects it has on; tradition, risk taking & corresponding challenges.

[Benjamin Pierce · Rating 4 out of 5]

This book came onto my radar quite a few years ago when I read the 5-star book 'Den of Thieves' which covers insider trading in the 80's. It referenced Predator's Ball quite a bit as a source and I'm glad I was able to circle back to it.

Written in 1988 at the tail end of the junk bond/M&A craze of the 80's, this book is a great period piece that looks at the craziness of tiny, unknown, companies swallowing up huge conglomerates thanks to the awesome power of Drexel's 'higher confident letter'.

[Dave Clarke · Rating 2 out of 5]

a fascinating story, that takes a bit of reading machoism to get through, as it's not the most flowing of books ... the last few chapters especially, when the author starts referring to herself in the third person, is particular grinding ... but if you can read past this, the story itself is a real eye opener, to the machinations of the world of corporate buyouts, bonds, M&A's and shady shenanigans in 80's financial America, whilst tracking the rise and eventual fall of the outlier of the junk bond phenomenon Michael Milken and his firm Drexel

[Richard · Rating 4 out of 5]

This is certainly the most interesting book on high yield bonds I have ever read.

For such a dense and (in parts) technical tome, I actually enjoyed it quite a lot - more than I thought I would, given it is essentially a play-by-play of junk bond financing 40 years ago. I feel like it has now given me more background to better appreciate other classic business books, which often make reference to Milken and DBL.

That being said, often I would have to go back and re read pages because I realised I had no idea what they had said.

[Kappner C. Boles · Rating 4 out of 5]

Good but incomplete story

Good depiction of Milken’s rise, but I would have appreciated an appendix with a further update. What specifically was he convicted of and what was the punishment? How did this compare with other similar cases? What has he done since getting out? The writer would like us to believe that his transgressions dramatically overshadow his contributions, but I am not entirely convinced.