Bain Capital executives have been bracing since summer for the inevitable downside to their former boss’s running for president: seeing their firm’s name dragged through the mud by Mitt Romney’s opponents.
But the onslaught has come harder and faster than they or the industry expected, with Romney’s emergence as a front-runner in the primaries. Republican rivals have painted Boston-based Bain Capital and private equity firms like it as engaged in the wrong kind of capitalism, making money as corporate raiders who cut jobs.
Steve Pagliuca, a managing director at Bain Capital and a Democrat who ran for US Senate in 2009, said, “We have come to understand the hyperbolic and distorted attacks that are part and parcel of today’s campaigns.’’
He noted that “we are extremely proud of our record and our dedicated team members, who recognize the political noise for what it is.’’
Pagliuca said the firm remains focused on “making great investments and helping to build and grow great companies.’’
Bain Capital may be used to the attacks, after four prior bouts with politics (three for Romney, one for Pagliuca). But its peers have been chagrined by the sharp criticism coming from Newt Gingrich. A Republican group that backs the former House speaker is releasing a 28-minute film that skewers Romney for allegedly destroying jobs.
“These are the guys who are supposed to be on my team, but they’re desperate,’’ said Kevin Landry, a Romney supporter who is chairman of the Boston private equity firm TA Associates. He said Gingrich is misinforming voters.
Mitt Romney’s position has been that buyouts to save troubled companies often involve pain.
“I just don’t think Americans have a good appreciation that the only creation of jobs is in the private sector,’’ Landry said. “What’s bad capitalism? When you cut some jobs to save some others? You have to do that sometimes.’’
The Private Equity Growth Capital Council, the industry’s lobbying group in Washington, is launching a counterattack to portray private equity firms as job creators. The attacks by Republicans on the industry rankle, not only because the party generally embraces business, but because some of the group’s key members, including buyout giants Blackstone Group and Kohlberg Kravis Roberts & Co., have been donors to Gingrich over the years.
In this election cycle, Gingrich’s 12th-largest source of funds is Blackstone Group, the New York investment firm. Employees there have donated $7,000 to his presidential campaign, according to the Center for Responsive Politics.
In 1996, when Gingrich was speaker of the House, he received $5,000 from private equity executives - notably Henry Kravis of KKR and John Childs, then of Thomas H. Lee Partners in Boston, according to an analysis by MapLight, a nonprofit that tracks money in politics.
Gingrich, despite his comments about Romney’s work, also served on the advisory board of a private equity firm, Forstmann Little & Co., after leaving Congress in 1999, Fortune and The New York Times reported.
“It is not the industry in question, it is the decisions Mitt Romney made when he was at the helm at Bain,’’ said Gingrich campaign spokesman R.C. Hammond.
Ken Spain, a spokesman for the Private Equity council, said in a statement that it is no surprise Romney’s record is being scrutinized. But, he said, the council aims to show people “how private equity grows and saves businesses.’’ Going forward, he said, “we plan to aggressively defend the industry against any mischaracterizations, regardless of political affiliation.’’
Romney’s position on the campaign trail has been that buyouts often involve troubled companies, and that job cuts are sometimes necessary to repair a business so it can grow again. But critics point to deals where Bain and Romney made profits even when the companies went bankrupt and jobs were lost.
Bain partners - many of them friends with the man who started the firm in 1984 - would prefer to quietly run billions of dollars in private equity, venture capital, and hedge funds, without the national spotlight shining so unflatteringly on them.
To some extent, the Bain Capital partners are hardened to the scrutiny after prior encounters with the rough-and-tumble political world. They were truly jarred in 1994, when Romney ran against Edward M. Kennedy for US Senate, and Kennedy unleashed an attack on him for layoffs at an Indiana paper company called Ampad.
Later, there was Romney’s successful run for governor of Massachusetts and unsuccessful first run for president.
The Ampad deal and others have been detailed many times, excruciatingly for the Bain Capital partners, who say they have created many more jobs than they have lost. Romney’s partners are not arguing with the revised number of jobs he now says he helped to create - 100,000 versus the tens of thousands he used to cite. But they would not back up the number or account for it in detail.
Landry, of TA Associates, said private equity has helped the companies his firm has invested in. Since 2004, employment at about 50 companies backed by TA has grown 20 percent to 68,747.