We know that Romney’s fortune derives in large part from his founding in 1984 of Bain Capital, one of the premier private-equity firms in the world, which he ran for the next 15 years or so, during a boom time for the industry. Among Bain’s most successful investments are those in well-known companies such as Staples, Domino’s Pizza, Dunkin’ Donuts and the Weather Channel. Others include lesser-known enterprises such as Experian, an information-services company that Bain bought (with Thomas H. Lee Company, another Boston-based buyout firm) for $1 billion in 1996 and sold months laterfor a profit of $700 million; and Seat Pagine Gialle, an Italian yellow-pages business whose investors, including Bain, made $1 billion in profits after two years.
We also know that Bain was supposedly so successful under Romney’s leadership that the firm was able to charge its investors fees 50 percent higher than those of its competitors. Instead of the typical industry fee of 2 percent of the cash under management and 20 percent of the profits on individual deals, Romney extracted from investors a 3 percent fee and 30 percent of profits for the privilege of investing in Bain’s deals. Sophisticated investors — pension funds, university endowments and large foundations — that put money in private equity don’t do this kind of thing willingly. They did it at Bain because they believed it was worth the price to get into the deals.
And finally, we know that the other people who founded private-equity firms around the same time that Romney and his partners started Bain, and who had to make do with a lower fee structure, are far richer than Romney. These men — Henry Kravis and his cousin George Roberts, the founders of KKR & Co.; the late Teddy Forstmann, the founder of Forstmann Little; David Bonderman and Jim Coulter, the founders of TPG Capital; Leon Black, the founder of Apollo Global Management; Steve Schwarzman and Pete Peterson, the founders of the Blackstone Group; David Rubenstein, the founder of the Carlyle Group; and Jonathan Nelson, the founder of Providence Equity Partners — each have a net worth measured in the billions. Schwarzman, with a fortune greater than $5 billion, is the wealthiest buyout mogul, according to the latest Forbes 400 list.
“Mitt Romney should be a billionaire,” Margaret Collins and Richard Rubin stated flatly last month in a detailed Bloomberg News examination of his wealth. Yet, when Boston Magazine listed the 50 wealthiest Bostonians in 2006, Romney, then the governor of Massachusetts, was not even on the list. His Bain partner, Steve Pagliuca, who joined the firm in 1989 (five years after Romney started it) was listed at No. 35, with a net worth of $410 million.
Romney’s net worth of $250 million is an estimate provided to the media by his campaign, and it is in line with the $254 million maximum value of his financial assets found in his June 1 presidential-candidate disclosure form. Yet this form is a masterpiece of obfuscation, in large part because it allows for absurdly wide ranges of value, with little specificity.