Monday, February 21, 2011

The Business of Mitt Romney

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.

I think it's safe to say that When many folks hear his name, they know him for MA Health Care Law (1, 2, 3) and the fact that he was a successful Governor and businessman. It is his business background and experience at Bain Capital that we will investigate 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 on the web. My goal today is not to single these hit pieces out but instead, present all 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 searched through Google and came across information On Bain & Company, Bain Capital, and Mitt Romney at Wikipedia. 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 4 Wikipedia links above, you will have access to them.

18 comments:

Jake S said...

Mitt Romney in 2012!

cindy said...

Mitt Romney is the only candidate out there who has the background and know how turn turn the economy around.

larry said...

Romney turned companies around and made money for all concerned. He is a great businessman and will be a great President/CEO of these United States.

Evelio Perez said...

Nice Job Bosman !!!!!!

Anonymous said...

"One of the fund's first start-up investments was Staples, Inc., the $15 billion office supply retailer. The funding enabled Staples to expand from one store in 1986 to nearly 1,700 in 2006."


zeke

ConMan said...

Thanks for putting this together Bosman.

I was hoping someone would answer Romney's Bain critics.

I plan on using your post as a reference now when touting Romney's business experience.

Anonymous said...

Very impressive business resume.

Anonymous said...

Thanks, Bosman.

The MSM is going to focus on a few companies who went bad after Bain, and ignore the hundreds who benefited.

-Martha

CraigS said...

Hi Bos,
Couple of other pieces of addendum missed by Mr. Kosman and the N.Y Post:

1. Bain invested $ 200 MM of their money in the 5 companies cited in his article. They made $ 500 MM in returns because all of these five companies went public sooner or later and were perceived by the investment community as worth far more after restructuring and reworking. Isn't that what capitalism is all about ? Isn't that what we need in a President for this country ?
2. All of the five companies cited in the Post article are still in business and doing quite well with many employees . Stage Stores, for example, has 13,000 employees and did $ 1.5 billion last year. Yes, they did restructure through bankruptcy in 2001. But, 3 years later, they did $ 1 billion in sales
Details is one of 4 major divisions of Steelcase which has 16,000 employees
AMPAD had a compound annual growth of 53 % immediately following Bain's acquisition in 1992 with revenues of $ 200 MM by 1996. Not too bad for a $ 5 MM investment
A little bit of homework would show how ridiculous this article is and how stupid is the statement that Romney " made a fortune from businesses he helped destroy "
Speaking of tanking businesses, the Post should take a look at Rupert Murdoch and his track record, particularly in Australia in the 1970-1980 period

CraigS

Ann said...

zeke,

""One of the fund's first start-up investments was Staples, Inc., the $15 billion office supply retailer. The funding enabled Staples to expand from one store in 1986 to nearly 1,700 in 2006."


Now that is called JOB CREATION!

kelly said...

I agree that Romney is more ready for the Presidency than any of the other potential candidates.

Dave said...

I became comMITTed to Romney's campaign in 2007 after studying his business career, his turnaround of the Olympics, and his salvage job of Massachusetts as Governor.

He really is in a class of his own.

Doug NYC GOP said...

Terrific summation of Romney's extensive business background.

I have always been impressed with Romney's ability and skills to get into situations in order to resolve a problem. I've heard him say in many interviews, that he likes to work. I don't belive he likes to work just for the gain of wealth, as some of the recent trash articles suggest. I think the challenge of fixing things is what energizes nd focuses him.

That's a great atribute to have in any Chief Exec.

phil said...

This is exactly why we need him in Washington!

Revolution 2010 said...

GREAT POST Bos.

Thanks for setting the record straight on Romney's business achievements.

Doug NYC GOP said...

Obviously Rupert and The Post (print version of Fox News) are trying to soften un Romney before the fight begins.

I do not expect him to get fair shake from Fox/Rush/Levin combine, especially if a certian ex-Gov runs.

Anonymous said...

I don't see Rush actively supporting Mitt unless he feels forced into it. Rush is clearly enamored with Palin. However, I do think that if it is necessary, Rush will make comments to the effect that Mitt has been an effective businessman, and that MA is a state and not the federal government. I don't really see MUCH support coming from Rush, but I do think that he will be a little more fair than Levin will be. That's what I hope, anyway.

AZ

Anonymous said...

It pleases me to see the blogs flooded with subversive campaign promoter comments & loose ones with swordstone conservatives. People should remember you cannot restructure the govt the way a CEO can for a corp. Business success does not translate to political success, given variations in principle governing authority. Conservative or not, it's an issue even for the remarkable financial track record he has. He would probably have best chance as Republican candidate to overtake the White House. But there's one issue about businessmen: they're always thinking business! Not always good for middle or lower class America. As a man with so many business ties, what can be said?!