IT’S A HOT SUMMER DAY. You’re dragging. You need an afternoon lift. You pull into Dunkin’ Donuts for an iced coffee confection, its plastic cup sweating in your hands. You get home and turn on The Weather Channel to see when the heat will break. Not for a while, it turns out. So you flip open the laptop, go to the Toys “R” Us website, and order a kiddie pool for the backyard. One you can fit in, too.
Over the course of maybe an hour, you’ve just interacted with private equity three times. More specifically, with Bain Capital, the Boston-based powerhouse launched 28 years ago by a sharp, Harvard-trained business consultant named Mitt Romney. It’s the brand that owns or has a stake in a number of brands you know — Dunkies, The Weather Channel, Toys “R” Us, and plenty of others (its portfolio includes 140 companies). Chances are you have no idea about the Bain connection, and you don’t care, so long as the coffee is sweet and cold, the forecasts are on target, and the pool arrives as promised.
But if Bain isn’t a name on most shoppers’ lips, it is increasingly familiar to political consumers paying even minimal attention to this year’s presidential contest. The firm, with $65 billion in assets, has been squarely in the political limelight ever since Romney’s Republican primary rivals began knocking his private-sector background as “vulture capitalism,” uncharitably describing his nearly 15-year tenure actively running the place. Often that light has not flattered, casting the company as an emblem of a lopsided system that’s great for the wealthy (sweet returns for executives, advantageous tax rates) but less so for the unwealthy (factory closures, layoffs, bankruptcies).
Romney’s Bain career, which consisted of investing in start-up companies and later taking over existing ones, not only made him exceedingly rich, it has become, in his telling, his central qualification to be president of the United States. The argument goes something like this: I know how jobs come and go; ergo, I can fix the American economy. That may or may not be a persuasive case in November; indeed, President Obama and his reelection team are working overtime to turn Bain into political Kryptonite. But one thing is clear. All the attention on Romney’s former workplace has forced Bain and its private equity brethren into a position they have historically not much enjoyed: having to publicly promote their work, open up about how they operate, and devote considerable time to shaping the popular narrative.
In response to the scrutiny, Bain’s managing directors penned an unusual three-page letter to investors earlier this year, offering a full-throated defense of the firm’s record, a summary of its investments and performance over nearly three decades, and a reminder of its employees’ extensive charitable activity. The executives, quoting Mark Twain on fact and distortion, asserted that companies under Bain’s control had collectively grown their revenues by $105 billion, $80 billion of it in the United States. “This sharply politicized issue attracts enormous attention and lends itself to misleading anecdotes and cherry-picking of the record,” the directors wrote. “But there should be no doubt that $105 billion of revenue growth is an economic engine with widespread benefits.”
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