Romney - the fast buck

The Wall Street Journal, aiming for a comprehensive assessment, examined 77 businesses Bain invested in while Mr. Romney led the firm from its 1984 start until early 1999, to see how they fared during Bain’s involvement and shortly afterward. Among the findings: 22% either filed for bankruptcy reorganization or closed their doors by the end of the eighth year after Bain first invested, sometimes with substantial job losses. The Journal analysis shows that in total, Bain produced about $2.5 billion in gains for its investors in the 77 deals, on about $1.1 billion invested. Overall, Bain recorded roughly 50% to 80% annual gains in this period, which experts said was among the best track records for buyout firms in that era.

One company, Worldwide Grinding Systems, that went belly up after Bain invested in it. The company not only lost 750 jobs, but the federal government had to come in to bail out its pension fund, while Bain walked away with millions in profits. By routeing investments through shell companies set up in Bermuda or the Caymans, Bain Capital allowed their investors to avoid the 35 percent corporate tax rate they would have to pay in the U.S., leaving more revenues for executive compensation.

One of Romney’s former partners at Bain has said, “I never thought of what I do for a living as job creation…The primary goal of private equity is to create wealth for your investors.”