| 
  • If you are citizen of an European Union member nation, you may not use this service unless you are at least 16 years old.

  • Stop wasting time looking for files and revisions! Dokkio, a new product from the PBworks team, integrates and organizes your Drive, Dropbox, Box, Slack and Gmail files. Sign up for free.

View
 

Romney's Political Fortunes Tied To Riches He Gained In Business

Page history last edited by PBworks 12 years, 9 months ago

Romney's Political Fortunes Tied To Riches He Gained In Business

 

By: David Kirkpatrick

The New York Times

Monday, Jun 04, 2007

"Mitt Romney owes his nearly $350 million fortune and his political career to a delicate negotiation with his boss in the summer of 1983.

 

"His boss, Bill Bain, founder of the Boston consulting firm Bain & Company, called Mr. Romney into his corner office to say that the partners had picked him to start an investment fund to cash in on the huge gains their clients were making in the stock market.

 

"To Mr. Bain's surprise, Mr. Romney, then 36, seemed wary. He worried about giving up his comfortable salary for a venture that might fail and, later, that investing would pose conflicts for a consulting firm.

 

"Mr. Bain had been determined not to cede any control of the investment fund, but over months of talks Mr. Romney persuaded him to do just that. Mr. Romney emerged as head of an independent sister company, Bain Capital. And Mr. Bain protected him financially while assuming the most risk.

 

"Two decades later, Bain Capital is one of the nation's five largest private equity firms, and Mr. Romney, who left its management eight years ago, is making his success there a cornerstone of his campaign for the Republican presidential nomination.

 

"Citing his business experience, he urges voters to reject 'lifetime politicians' who 'have never run a corner store, let alone the largest enterprise in the world.'"

 

...

 

"Supporters of Mr. Romney argue that those skills also equip him for public office, whether as governor of Massachusetts, which he was for four years, or as president.

 

"'In private equity and in consulting, a lot of what you rely on is trust and confidence and persuasion,' said Mr. Kriss, who worked in Mr. Romney's cabinet when he was governor. "It is the same in the public sphere, and over many decades that is what Mitt has proven to be good at.'"

 

...

 

"Mr. Romney started his early career intending to run a company, not buy and sell them. As a boy, he had accompanied his father, George W. Romney, to work as chief executive of American Motors, where he said they discussed the new models, corporate strategy and even union contract talks.

 

"'He would pretend to be very interested in the things I would say,' Mr. Romney recalled.

 

"After graduating from Brigham Young University, Mr. Romney finished near the top of his class at Harvard Business School in 1975 with a law degree as well. He soon joined Bain & Company, a training ground for aspiring corporate chieftains. Among the consultants when he arrived were the future chief executives of American Express, eBay and Dell, for example.

 

"Mr. Romney's academic credentials were competitive with any of them, but he had something more, Mr. Bain recalled."

 

...

 

"By around 1981, however, Mr. Romney was restless for a company to run. He nearly accepted a job at an electronics conglomerate in hope of eventually running one of its businesses. He stayed when Mr. Bain wrote him a check for $200,000 and promised to get him a better position, Mr. Bain said.

 

"When Mr. Bain proposed starting Bain Capital about two years later, Mr. Romney said, 'I loved the idea,' adding that he was cautious at first because 'it is my nature to study things extensively before I jump.'"

 

...

 

"Mr. Bain took the lead in raising money from his partners and rich friends, including Mortimer B. Zuckerman, the Boston real estate mogul, and Robert K. Kraft, owner of the New England Patriots football team. But he always took Mr. Romney along to help seal the deal. The younger man would stand in front of a string of skeptical multimillionaires, flipping overhead projector slides that highlighted Bain Capital's plans, honing the knack for opening wallets that would help him become the top Republican presidential fund-raiser this year.

 

"The political fund-raising 'was a lot easier than raising some of the first Bain funds, I can assure you,' said Mr. Kriss, the former Bain partner. 'Mitt is very, very good at that, and he has done it for a long time.'

 

"When Mr. Romney finally set up shop just across the hall from Bain consulting in 1984, his initial plan centered on providing venture capital - seed money - for ideas spun off by Bain consultants. The first investment, a chain of eye-surgery centers, was a modest success.

 

"A year later, Mr. Romney hit on a big winner: the office supply chain Staples. To evaluate the business plan, he insisted on reading invoices to find out what small businesses were spending on notepads, paper clips and pens - a demonstration of his devotion to data that he brings up often on the stump.

 

"But the investment was primarily a sales job. The founder of Staples, Thomas G. Stemberg, had already sold a successful grocery business. Investors were lining up to get in on his next venture. Mr. Romney's achievement was persuading Mr. Stemberg to let Bain Capital take the lead.

 

"'Mitt was just really nice, humble, listened, asked questions,' Mr. Stemberg said in an interview. 'And he talked about how at Bain, unlike other venture capitalists, they would actually help you run the business.'"

 

...

 

"Bain invested in more than 150 companies under Mr. Romney. Most were in industries like oil drilling or medical waste, but the firm also acquired household names like Dominos Pizza, Brookstone stores, Mattress Discounters and Artisan Entertainment (in time to cash on its 'Blair Witch Project' hit).

 

"By the time Mr. Romney left the firm in 1999, the investments it had sold off had made enough money to deliver an average annual return that amounted to as much as 100 percent before fees, several of its investors said. (Later sales were less lucrative, the investors said.)

 

"By then, the firm had expanded to 18 partners from 5, with $4 billion under management and 115 employees. (A spokesman for Bain Capital declined to comment on its profits.)"

 

...

 

"Running Bain Capital, he said, has more in common with being a candidate, governor or even president than many people realize. The job of a chief executive also involves persuading fractious constituencies – investors, bankers and even 'people who want your job' - to pull together, he said.

 

"'There is a popular conception that being a C.E.O. you have no boss and that people just do what you tell them to do, like the captain of a ship,' he said. 'Nothing could be further from the truth.'"

 

View Entire Article

 

http://www.nytimes.com/2007/06/04/us/politics/04bain.html?ref=us&pagewanted=print

Comments (0)

You don't have permission to comment on this page.