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Romney and Bain Capital
Old 01-10-2012, 01:53 PM   #1
Professor S
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Default Romney and Bain Capital

Recently, there has been a lot said about Bain Capital and Mitt Romney, and after reading this article pretty much all of it (positive and negative) is either untrue or an exaggeration:


Here is what I took away:

The Journal's findings could provide fodder for both critics and supporters of Mr. Romney's presidential ambitions and of his role at Bain...

...The numbers, however, also reflect Bain's investing style, which, particularly during the firm's early years, was focused on smaller and sometimes troubled companies that Bain hoped to fix or build. Bain was investing in "riskier deals," said Steven N. Kaplan, a finance professor at the University of Chicago's Booth School of Business. "For every one that went bankrupt, they had one that was a screaming success. The overall effect was terrific performance" for the firm's investors.

...Seventeen of the 77 private-equity targets filed bankruptcy petitions, usually Chapter 11 reorganization, or closed their doors by the end of the eighth year after Bain's investment...
In essence Bain Capital purchased failing companies in an effort to turn them around, and if they couldn't, then would either sell or dismantle them. In my mind, these companies were on the road to failure before Bain purchased them, so I can't exactly blame them for lost jobs if the companies were likely going to fail as it was. I think Bain can be credited with saving many jobs, though, and perhaps creating a few.

On a side note, I'm shocked to see how other Republicans have basically disqualified themselves by going after Mitt's record at Bain and his comments for wanting to "fire" insurance companies if you don't like them or their services. If there is any litmus test for Republicans it is a principled belief in capitalism. Gingrich, Huntsman, and Perry have all doomed their own campaigns by going for an ignorant, populist, anti-wealth, class-warfare message to attack Romney. Leave that garbage for the Democrats.
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