Romney doesn't need to apologize for his Bain career!

One of the oldest tactics in a political campaign is to try and turn an opponent’s biggest asset into a big liability. One of Mitt Romney’s supposed big pluses is that he’s a “conservative businessman” who knows how to fix the U.S. economy. But now Newt Gingrich (or at least his SuperPac) is launching an expensive attack to rebrand Romney as a Gordon Gekko whose “business success comes from raiding and destroying businesses.”

Well, the Wall Street Journal has just published its investigation into Romney’s record at Bain Capital. The paper “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.” And here is what it found:

– 22 percent 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.

– An additional 8 percent ran into so much trouble that all of the money Bain invested was lost.

– Ten deals produced more than 70 percent of the dollar gains.

– 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 percent to 80 percent annual gains in this period, which experts said was among the best track records for buyout firms in that era.

– Academic research has shown that buyout firms during this era exited their deals on average after 5½ years, but in a large percentage of cases were still involved beyond seven years. … If the Journal analysis were limited to bankruptcies and closures occurring by the end of the fifth year after Bain first invested, the rate would move down to 12 percent. That measure would exclude several cases that have brought Mr. Romney political criticism, where businesses filed for bankruptcy seven or eight years after Bain’s investment.

So what does it all mean? Well, Romney was really good at what he did. And what he did, initially, was venture capital, providing dough to promising young firms. Then he shifted to private equity, which is a) using investor money and debt to take over a business, b) attempting to improve its profitability (which may mean cutting the workforce), and c) selling the business and, as the WSJ, puts it, “extracting fees and sometimes dividends.”






Link:Romney doesn’t need to apologize for his Bain career