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First of two parts

To assess Romney, look beyond the bottom line

He created jobs, closed factories, made enemies and inspired colleagues.

December 16, 2007|Bob Drogin | Times Staff Writer

washington -- Mitt Romney twice emphasized his unique business background when he and eight other Republican presidential candidates faced off in a debate last week in Iowa.

"I've spent the last, as I've told you, 25 years in the private sector," former Massachusetts Gov. Romney declared at one point. "I understand why jobs come and why jobs go. I've done business in 20 countries."

In speeches, and on his campaign website, Romney offers few details about his role as a high-stakes corporate deal maker, however. He usually calls himself an entrepreneur, or cites his years in "venture capital," implying he only launched new companies or nurtured their growth.

His record is more complex -- and more controversial.

From 1984 until 1999, Romney led Bain Capital, a Boston-based private equity group that earned jaw-dropping profits through leveraged buyouts, debt hedge funds, offshore tax havens and other financial strategies. In some cases, Romney's team closed U.S. factories, causing hundreds of layoffs, or pocketed huge fees shortly before companies collapsed.

Even Romney's staunchest supporters acknowledge that his business record exposes him to criticism.

"The story that gets written is he made lots of money and he's an evil person, that he's a robber baron," said Charles Baird Jr., a former managing director at Bain Capital. "People should be proud of the people he hired, the jobs he created and the pension funds he helped."

During Romney's tenure at Bain Capital, outside experts say, most of the companies he and his colleagues helped manage ended up stronger and more profitable. Although exact figures are impossible to obtain, more companies clearly added jobs than cut them.

Some of Romney's colleagues recall him as vain, however, and focused only on the bottom line. They saw him as impatient and unconcerned about those affected by his decisions.

"They're whitewashing his career now," said Marc B. Wolpow, a former managing director at Bain Capital who opposes Romney's White House bid. "We had a scheme where the rich got richer. I did it, and I feel good about it. But I'm not planning to run for office."

As a business leader, Romney displayed skills that might prove useful in the Oval Office. He recruited a talented team of aggressive acolytes, pored over data before making decisions and relied on charm as well as tenacity to win over adversaries.

But Romney sometimes showed the strain. In tense meetings, he sometimes perspired so heavily it became an office joke. Or he nervously flapped his tie and said, "Oooohhh, what do we do now?" former colleagues said.

Romney joined Bain & Co., a management consulting group, in 1978. He quickly drew notice in Bain's hypercompetitive climate. At one point, he helped anxious colleagues save a business proposal to help an ailing hospital group.

"It was due the next day, and we were in tough shape," recalled Baird. "He got involved and literally stayed up all night, writing huge portions of the proposal, driving us all, and we ultimately got the biggest bid that Bain had ever gotten. He didn't yell or scream, or blame other people. He focused on fixing the problem."

In 1984, William W. Bain Jr., the consulting group's founder, tapped Romney to lead a spinoff they called Bain Capital.

Rather than just advising corporate clients for a fee, Romney and four colleagues at Bain Capital planned to invest directly in start-up companies, provide hands-on management to get them going, then sell the stake in five years or so. They raised $37 million for their first equity fund.

The venture capital model is common today, but it was a nascent industry at the time. And Romney's young team inspired little confidence: He was the eldest at 36.

"We were all younger than the people we were dealing with," recalled Geoffrey S. Rehnert, one of the co-founders. "But Mitt had a personal network from his family background that gave him the ability to carry himself with greater stature. He was the adult in our group."

From the start, colleagues recall, Romney enforced a discipline of aggressive analysis, sharp-elbowed deals and intense peer review. He embraced a Socratic style in meetings, asking endless questions and taking an opposing view to understand all the options.

"He felt his role was to be the devil's advocate," said Michael F. Goss, now a managing director and chief operating officer of Bain Capital. "Mitt was the guy you had to convince."

An early bonanza came when Thomas G. Stemberg, a local entrepreneur, sought financing to build a national chain of office supply "superstores." Until then, small stationery shops and other retailers filled the need.

"Many venture capital guys thought the plan was a dumb idea," recalled Stemberg. "Who in the world would want to save money on paper clips, pencils and computer diskettes? Mitt, who was a very frugal person, got the idea."

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