Where did romney get his money to start bain capital

Where did romney get his money to start bain capital

Author: 98a Date of post: 22.06.2017

Mitt Romney - Wikipedia

Almost 13 years ago, Mitt Romney left Bain Capital, the successful private equity firm he had helped start, and moved to Utah to rescue the Salt Lake City Olympic Games and begin a second career in public life. Yet when it came to his considerable personal wealth, Mr. Romney never really left Bain. The arrangement allowed Mr. Romney to pursue his career in public life while enjoying much of the financial upside of being a Bain partner as the company grew into a global investing behemoth.

In the process, Bain continued to buy and restructure companies, potentially leaving Mr. Romney exposed to further criticism that he has grown wealthier over the last decade partly as a result of layoffs.

Moreover, much of his income from the arrangement has probably qualified for a lower tax rate than ordinary income under a tax provision favorable to hedge fund and private equity managers, which has become a point of contention in the battle over economic inequality. An examination of Mr. Romney left Bain in early , he received a share of the corporate buyout and investment profits enjoyed by partners from all Bain deals through February Romney had a share of the year he left.

He was also given the right to invest his own money alongside his former partners. Because some of the funds and deals covered by Mr. During his political career, Mr.

where did romney get his money to start bain capital

Romney has promoted his experience as a businessman while deflecting criticism of layoffs caused by private equity deals by noting that he left Bain in But records and interviews show that in the years since, he has benefited from at least a few Bain deals that resulted in upheaval for companies, workers and communities.

One lucrative deal for Bain involved KB Toys, a company based in Pittsfield, Mass. Three years later, when Mr. Romney was the governor of Massachusetts, the company began closing stores and laying off thousands of employees. Much information about Mr.

Federal law does not obligate him to disclose the precise details of his investments. He has declined to release his tax returns, and his campaign last week refused to say what tax rate he paid on his Bain earnings. Because the campaign is required to provide only a minimum value for some Bain assets now held by Mrs. Romney, the total could be far more. A spokesman for Bain declined to comment on the specifics of the arrangement, citing confidentiality agreements with Mr.

Andrea Saul, a spokeswoman for Mr. Teissier said an arrangement like Mr. Other executives contended that the deal did not make Mr.

where did romney get his money to start bain capital

Romney nearly as wealthy as his peers in private equity who took their firms public. Romney is often described as a founder of Bain Capital, it originally grew out of another business: It was early in the leveraged buyout era, when sharp-elbowed Wall Street dealmakers like Henry R.

This Is How Mitt Romney Actually Made All His Money - Business Insider

Schwarzman and Peter G. Peterson were starting private equity firms that raised money from investors — university endowments and state pension funds — and combined it with enormous amounts of debt to buy companies. About every three years, the firm raised a new buyout fund, each doing business for about a decade: In the early s, the firm formed a new management entity, Bain Capital Inc.

Romney was given full ownership, although it is not clear how much of his own money he invested. Private equity firms typically act as the general partner for each fund they create. The firms collect an annual management fee equal to 2 percent of the fund during the period it is buying and restructuring companies.

Former Bain officials say that when Mr. Romney ran the firm, he motivated colleagues by spreading profits widely and keeping a smaller percentage, often in the single digits, for himself. He and his co-workers also invested their own money in most of the deals to increase their personal returns. Romney turned his sights beyond the business world. In February , he left Bain to help turn around the troubled organization of the Winter Olympic Games. Romney announced that he had formally transferred his ownership of Bain Capital Inc.

But behind the scenes, Mr. Romney had negotiated his retirement agreement. The agreement would cover any new fund or venture started by his former partners until February , although his stake would decline with each successive fund. He and his wife also would be permitted to invest their own money in co-investment vehicles typically reserved for Bain executives. While some former business associates said they considered the deal generous, others said Mr.

Romney might have gotten even more from Bain had he not wanted a quick move into public life. View all New York Times newsletters. Some specifics of Mr. After taking office in , Mr. Romney moved the bulk of his assets into two blind trusts, according to his Massachusetts financial disclosures. The retirement deal turned out to have a huge upside that few could have predicted: A Share of Huge Growth.

Retirement Deal Keeps Bain Money Flowing to Romney - The New York Times

Private equity firms, armed with megafunds and cheap and easy Wall Street financing, set their sights on acquiring big brand-name companies. Bain formed a venture capital arm, spun off affiliates to pursue private equity investments in Europe and Asia and expanded Sankaty Advisors, an affiliate that makes investments in debt securities.

But even as his share of profits declined over time, the size of those funds was growing enormously. Romney to continue holding equity in the firm or cash out by selling his shares on the public market.

Sperling, a co-president of the private equity firm Thomas H. Romney and the other partners a quick percent return on their money. But it also left the toy company with a heavy debt burden. Before long, the company began closing stores around the country and laid off 3, workers. It filed for bankruptcy protection in Two more recent deals have also led to spiraling debt loads and layoffs. Sensata Technologies, a European company that makes sensors and controls used by the auto and aerospace industries, prospered after a Bain-led buyout in , but the firm also laid off several hundred American workers.

Americans United for Change, an independent group backed by organized labor, has begun an ad campaign comparing Mr. We understand some may question our record for political purposes, but our focus remains on building great companies and improving their operations. Romney has expressed regret for lost jobs while defending the work of private equity firms in creating efficient and successful companies. Romney said in an interview Sunday on Fox News Channel. Tax treatment of hedge fund and private equity compensation has been another point of political contention.

The lower rate had traditionally been reserved for investors who put their own capital at risk, but I. Democrats in Congress have periodically sought to rescind that privilege, and the Obama administration is considering another push to change that provision.

Fleischer, the University of Colorado law professor. Federal law does not require candidates to report underlying assets held by hedge funds or private equity firms in which they are invested, since the firms typically do not provide that information to their investors. Much of that uncertainty would evaporate if Mr. Romney would most likely have to unwind his stakes in all Bain funds.

Romney and Bain Capital: Why he’s so afraid of talking about what he did at Bain.

A version of this article appears in print on December 19, , on Page A1 of the New York edition with the headline: Buyout Profits Keep Flowing to Romney. Order Reprints Today's Paper Subscribe. Tell us what you think.

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where did romney get his money to start bain capital

You must select a newsletter to subscribe to. You agree to receive occasional updates and special offers for The New York Times's products and services. Thank you for subscribing. An error has occurred. Please try again later. You are already subscribed to this email. Peter Lattman and Kitty Bennett contributed reporting. NEWS ANALYSIS Newt Gingrich and Mitt Romney Leave Path Back to Middle DEC. THE LONG RUN Two Mitt Romneys: Wealthy Man, Thrifty Habits DEC. After Mitt Romney Deal, Company Showed Profits and Then Layoffs NOV.

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