Business career of Mitt Romney
After he received a joint Juris Doctor and Master of Business Administration from Harvard University in 1975, Mitt Romney was recruited by several firms and chose to remain in Massachusetts to work for Boston Consulting Group (BCG), reasoning that working as a management consultant to a variety of companies would better prepare him for a future position as a chief executive.
Its idiosyncratic founder, Bruce Henderson, was regarded as outside the mainstream of corporate consulting, and BCG was routinely disparaged by faculty and students at Harvard Business School.
[5] But BCG was a pioneering upstart that fostered camaraderie among its employees, who traveled around the country to advise clients, and that is where Mitt Romney chose to start his career.
"[9] Unlike other consulting firms, which issued recommendations and then left, Bain & Company had a practice, that Romney learned, of immersing itself in a client's business and working with them until changes were implemented.
[8] He became a vice-president of the firm in 1978,[12] and worked with clients such as the Monsanto Company, Outboard Marine Corporation, Burlington Industries, and Corning Incorporated.
[1][6] He initially refrained from accepting the offer, and Bain re-arranged the terms in a complicated partnership structure so that there was no financial or professional risk to Romney.
[25] In the face of skepticism from potential investors, Romney and his partners spent a year raising the $37 million in funds needed to start the new operation.
[34] Bain Capital eventually reaped a nearly sevenfold return on its investment, and Romney sat on the Staples board of directors for over a decade.
[35] A few years later, Bain Capital made an investment in the technology research outfit the Gartner Group, which ended up returning a 16-fold gain.
[1][11] He wanted to drop a Bain Capital hedge fund that initially lost money, but other partners prevailed and it eventually gained billions.
[15] He was announced as its new CEO in January 1991[18][19] but drew only a symbolic salary of one dollar[15] (he remained managing general partner of Bain Capital during this time).
[48] To avoid the financial crisis that a buyout would have triggered, the group of founding partners agreed to return about $100M cash and forgive outstanding debt.
[49] Romney also imposed a new governing structure that included Bain and the other founding partners giving up control, and increasing fiscal transparency.
[1][2][15] Within about a year, he had led Bain & Company through a successful turnaround and returned the firm to profitability without further layoffs or partner defections.
Within a year, Bain bounced back to profitability without major partner defections,[48] and the groundwork was laid for a period of steady growth.
[53] Ampad's revenue began to decline in 1997 and the company laid off employees and closed production facilities to maintain profitability.
Bain Capital, together with Thomas H. Lee Partners, acquired Experian, the consumer credit reporting business of TRW, in 1996 for more than $1 billion.
Formerly known as TRW's Information Systems and Services unit, Experian is one of the leading providers of credit reports on consumers and businesses in the US.
[58] Other notable Bain investments of the late 1990s included Sealy Corporation (the manufacturer of mattresses),[59] Alliance Laundry Systems,[60] Domino's Pizza,[61] and Artisan Entertainment.
[67][68] Romney returned to Bain Capital the day after the 1994 election, but the loss had a lasting effect; he told his brother, "I never want to run for something again unless I can win.
[35][63] In July 1996, when partner Bob Gray's teenage daughter went missing in New York City, Romney shut down the Boston office and sent 56 employees to search for her, also setting up a toll-free tip line, and hiring private investigators.
The search took Romney into contact with runaways on the seediest streets of New York, and a traced telephone call helped to locate the daughter, who had travelled to New Jersey for a concert without telling her parents.
[82] By the end of the decade, Bain Capital was on its way to being one of the top private equity firms in the nation,[14] having increased its number of partners from 5 to 18, having 115 employees overall, and having $4 billion under its management.
[13][35][63] Bain Capital's approach of applying consulting expertise to the companies it invested in became widely copied within the private equity industry.
"[11] Kaplan argues that, "Bain Capital and Romney delivered spectacularly well for their customers, better than other [private equity] firms that on average outperformed the public markets.
[66][69] He took a paid leave of absence from Bain Capital in February 1999 when he became the head of the Salt Lake Organizing Committee for the 2002 Winter Olympics.
[100][101] He did stay in regular contact with his partners, and traveled to meet with them several times, signing corporate and legal documents and paying attention to his own interests within the firm and to his departure negotiations.
[38][100] Although he had left open the possibility of returning to Bain after the Olympics, Romney made his crossover to politics permanent with an announcement in August 2001.
[104] Summarizing his business career and the creative destruction of the private equity industry, he has said: "Sometimes the medicine is a little bitter but it is necessary to save the life of the patient.
[111] The Romney family's Tyler Charitable Foundation gave out about $650,000 in that year, some of which went to organizations that fight diseases such as cystic fibrosis and multiple sclerosis.
