There are a lot of things people don’t know about Mitt Romney. Some that I feel are important when considering him for the office of President of the United States.
“Frankly, Governor Romney in his career has created more jobs than the entire Obama cabinet combined, so he could actually talk about [the economy].” -Newt Gingrich
I think it’s safe to say that when many folks hear his name, they know him for the fact that he was a businessman for most his life; a successful one at that. It is precisely his business background and experience at Bain Capital that we will take a look at today.
I had also heard that when Romney left Bain Capital, that he could have made billions but instead left the company with much less as to not hurt the company or its investors. We will look into this as well.
The reason I am posting this Bain piece today is that for the past 2 or 3 days, there have been some not-so-flattering articles on Romney’s Bain background circling on the web. My goal today is not to single these hit pieces out, but instead present the facts and let the readers decide.
Before I start, I thought it might be interesting for you to view this brief video from the 2008 campaign and hear how Romney relates his background in business to the job of the President:
My search for material on Romney’s business background didn’t take very long. I did a quick Google search and came across information on Wikipedia about Bain & Company, Bain Capital, and Mitt Romney. That information is as follows:
In 1977 Romney was hired by Bain & Company (not to be confused with Bain Capital), a hot new management consulting firm in Boston that had been formed a few years earlier by Bill Bain and other former Boston Consulting Group employees. Bain would later say of the thirty-year-old Romney, “He had the appearance of confidence of a guy who was maybe ten years older.” With Bain & Company, Romney proved adept at learning the “Bain way”, which consisted of immersing itself in each client’s business, and not simply to issue recommendations, but to stay with the company until they were effectively changed for the better. With a record of success with clients such as the Monsanto Company, Outboard Marine Corporation, Burlington Industries, and Corning Incorporated, Romney became a vice president of the firm in 1978 and within a few years one of the its best consultants. Romney became a firm believer in Bain’s methods; he later said, “The idea that consultancies should not measure themselves by the thickness of their reports, or even the elegance of their writing, by rather by whether or not the report was effectively implemented was an inflection point in the history of consulting.”
Romney was restless for a company of his own to run, and in 1983 Bill Bain offered him the chance to head a new venture that would buy into companies, have them benefit from Bain techniques, and then reap higher rewards than just consulting fees. Romney was initially cautious about accepting the offer, and Bain re-arranged the terms so that there was no financial or professional risk to Romney. Thus, in 1984, Romney left Bain & Company to co-found the spin-off private equity investment firm, Bain Capital. Bain Capital was founded by Bain & Company partners Mitt Romney, T. Coleman Andrews III, and Eric Kriss. Bain and Romney spent a year raising the $37 million in investment money needed to start the new operation. As general partner of the new firm, Romney was frugal and cautious, spending little on office appearance and finding the weak spots in so many potential deals that by 1986, very few had been done. At first, Bain Capital focused on venture capital opportunities. Their first big success came with a 1986 investment to help start Staples Inc., their investment eventually reaped a nearly sevenfold return on its investment.
Now It really gets INTERESTING. And there is more. Talk about loyalty to the company that gave him his start:
In 1990, Romney was asked to return to Bain & Company (not to be confused with Bain Capital), which was facing financial collapse. As CEO (but only drawing a symbolic salary of one dollar), Romney managed an effort to restructure the firm’s employee stock-ownership plan, real-estate deals and bank loans, while rallying the firm’s thousand employees, imposing a new governing structure that included Bain and the other founding partners giving up control, and increasing fiscal transparency. Within a year, he had led Bain & Company through a highly successful turnaround and returned the firm to profitability without further layoffs or partner defections. He turned Bain & Company over to new leadership and returned to Bain Capital.
During the 14 years he headed the company, Bain Capital’s average annual internal rate of return on realized investments was 113 percent. The firm’s successfully invested in or acquired many well-known companies such as Accuride, Brookstone, Domino’s Pizza, Sealy Corporation, Sports Authority, and Artisan Entertainment, as well as lesser-known companies in the industrial and medical sectors.
Romney left Bain Capital in February 1999 to serve as the President and CEO of the 2002 Salt Lake City Olympic Games Organizing Committee. His experience at Bain & Company and Bain Capital gave Romney a world view that was business oriented – centering around a hate of waste and inefficiency, and a love for data and charts and analysis and presentation – that he would take with him to the public sector. As a result of his business career, by 2007 Romney and his wife had a net worth of between $190 and $250 million, most of it held in blind trusts. Although gone, Romney received a passive profit share as a retired partner in some Bain Capital entities. An additional blind trust existed in the name of the Romneys’ children and grandchildren that was valued at between $70 and $100 million.
It’s clear that Romney could have taken more away from Bain Capital when he left. It seems that Romney’s compensation package was FAR LESS than it could have been. And how about taking a $1 dollar salary as CEO to turn around the company of the man who gave him his initial start?
Twenty years after its inception, Bain Capital manages approximately $65 billion in assets, and has founded, acquired, or invested in hundreds of companies including AMC Entertainment, Brookstone, Burger King, Burlington Coat Factory, Domino’s Pizza, DoubleClick, Guitar Center, Hospital Corporation of America (HCA), Sealy, The Sports Authority, Toys R Us, Unisource, Warner Music Group and The Weather Channel.
After reviewing his business background, coupled with his experience as a Governor, I have no doubt that Mitt Romney has all the talent needed to help rectify our bad economy. I can think of no other possible candidate that could bring this kind expertise to the Presidency and to make the necessary decisions needed to turn the U.S. economy around.
*Please Note: There were several sources to back up the facts from Wikipedia. If you follow the Wikipedia links above, you will have access to them.