The Companies Romney "Helped Start"

In recent statements and a current ad mention is made of Staples, Sports Authority and Steel Dynamics as companies Romney “helped start"! The use of the words "helped start" is very important (and misleading) since it appears (from what I have been able to determine from limited “public” information) that Bain Capital was, for the most part, a minority investor.

The Staples Wikipedia article says that it “was co-founded (in 1995) by Leo Kahn and Thomas G. Stemberg, who were former rivals in the New England retail supermarket industry”. The article makes no mention of either Romney or Bain Capital involvement. Whatever role Mittens may have played is not at all clear and, until he gives a true financial accounting, the Staples job creation claims must be considered bogus. Of course, any mom & pop stationary store job losses must be used as an offset to any jobs “created” since Romney uses government released figures against Obama which are the net of jobs added less jobs lost.

The Sports Authority article states that it was founded by a venture capital syndicate “led by William Blair Venture Partners and included First Chicago Venture Partners, Bain Capital, Phillips-Smith Venture Partners, Marquette Venture Partners, and Bessemer Securities." The financial contribution of each member of the group is not indicated. Since Bain was clearly only one of many investors, Willard cannot make full, or possibly even major, claim of any job growth.

The short Wikipedia article on Steel Dynamics states that the company was founded in 1993 in Fort Wayne, Indiana. Investor's.com in an article favorable to Romney states that:

GE Capital (GE) was interested, but CEO Jack Welch told Busse (a Steel Dynamics co-founder) he didn't want to fund the whole thing because it would be the biggest gamble GE had ever taken on a startup. Welch brought in Bain, which investigated the project. Busse said he met with Romney. Bain liked the deal and invested $18.3 million.

"Their general strategy is to exit early," Busse said. Bain later sold its stake for $104 million, according to a 2000 prospectus from Deutsche Bank. The private equity firm should have held on longer. Steel Dynamics went public in November 1996, finishing its first month of trading with a split-adjusted price of 4.56 a share. The stock reached a peak of 40.92 in June 2008 for a gain of 797%.

Apparently, Romney exited the investment long before the greatest profit (and job growth) occurred. How G.E. Capital made out from their investment is not stated. The extent of other investors who may have "helped start" this company is not known. The size of the company at the time of the IPO when Romney may well have baled out is likewise unknown.

Using Willard's logic, anyone who buys stock in an IPO could claim that they "helped start" the company since they actually are a "minority investor" like Bain and as such could then boast of subsequent job additions while ignoring competitor job losses.

According to the Wikipedia Bain Capital article "The Bain Capital team was initially reluctant to invest its capital. The partners saw weak spots in so many potential deals that by 1986, very few had been done." However, in 1989, the firm "adjusted its strategy to focus on leveraged buyouts and growth capital investments in more mature companies." How much of Romney’s success was as a “corporate raider” rather than a minority investor “venture capitalist” is not clear.

Until Romney comes clean on what actually occurred during his tenure at Bain and releases his tax returns, the public can only speculate. What is clear is that Romney’s misleading statements cannot be relied upon for the truth.