Staples is now the world's largest office-supply company, employing 90,000 workers worldwide, but in the 1980s it was a startup having trouble attracting investors — until it came to Bain Capital, an investment firm founded and run at the time by Mitt Romney.
Bain was considered the gold standard in venture capital circles, and when Mr. Romney put the firm's stamp on Staples, money began to flow, said Tom Stemberg, who co-founded the company in 1986.
"When we started raising money, it was a little bit hard," Mr. Stemberg told The Washington Times. "Once Bain and one or two other guys signed up to do it, there were at least 20 firms that wanted to make an investment. The reason we chose Bain is because money is fungible. What's not [fungible] is the amount of value an investor can add and Bain, in the case of Staples and I'm assuming in other situations, was as high a value-added investor as I have ever worked with."
The story of Staples — and a string of other companies the former Massachusetts governor once backed — is likely to be at the center of the U.S. political narrative for the next week, as Mr. Romney's presidential rivals try to use his business resume against him ahead of the possible make-or-break South Carolina Republican primary vote Jan. 21.
Staples' success has become a part of Mr. Romney's chief pitch to voters — as head of Bain Capital from 1984 to 1999, he led an economic investment engine he says spawned 100,000 jobs. As president, he says, he could do it again on a broader scale — for the whole country.
But Bain began to shift over the years, doing less on the venture capital side to create companies and more on the private equity side to buy, break down, repackage and sell off struggling companies. It is that side of his business background that has taken center stage in recent days as Democrats and some of his fellow Republican presidential hopefuls accuse him of being part of a "destruction" side of capitalism's "creative destruction."
"Bain, at times, engaged in behavior where they looted a company," former House Speaker Newt Gingrich said at a debate Sunday. Texas Gov. Rick Perry followed that up by likening private equity firms to "vultures" that feast on companies, collecting profits for themselves while issuing pink slips to workers.
Despite his attacks, Mr. Perry's own state invests in Bain through its teacher retirement system.
Among other household names Bain backed were Sports Authority and Domino's Pizza, as well as Steel Dynamics and Bright Horizons, which now manages child day care centers.
Along the way, Mr. Romney made a personal fortune reported to be about $200 million.
Steven Neil Kaplan, a professor at the University of Chicago School of Business, told The Times that Bain was "among the best among private equity investors" and said it garnered a solid record of accomplishments.
"When you make investments, some of your investments go well, and some of your investments don't go well," Mr. Kaplan said. "What everyone is focusing on is the investments that didn't go well. In some of their investments, one of the ways you make a company more valuable is you buy businesses that are not well-managed and you make them very productive and more efficient, and that sometimes means cutting jobs."
The Wall Street Journal this week took a closer look at 77 businesses in which Bain invested while Mr. Romney led the firm. Of those, the Journal said, 22 percent closed or filed for bankruptcy within eight years of Bain's investment.
Bain also produced what the Journal called "stellar returns for its investors," though the bulk of those came on a few major investments. Of the top 10 companies that produced those returns, four later landed in bankruptcy court, though many of the firms with which Bain was involved did emerge from bankruptcy eventually.
Campaigning in Greenville, S.C., on Thursday, Mr. Romney said Bain was trying to preserve and boost companies. In some cases, that meant streamlining businesses and losing jobs.<t-4>
"The reality is in the private sector that there are some businesses that are growing and thriving, and we were fortunate enough to be able to be part of that in a small way," he said. "And there are some businesses that have to be cut back in order to survive and to try and make them stronger. Sometimes you're successful at that and sometimes you're not."
The record aside, the attacks continue.
The Democratic National Committee has challenged Mr. Romney's claim that Bain helped spawn 100,000 jobs. In a Web video, it accuses him of "destroying the economic lives of companies, individuals and entire communities."
Mr. Perry and Mr. Gingrich have toned down their criticisms, though both still say it's fair to question specific instances where it appears that companies have taken advantage of the economic system.
Mr. Gingrich did not mention Mr. Romney or Bain explicitly during campaign stops Thursday in South Carolina, and Mr. Perry did not do so early in the day. But he later told the Associated Press that it was better for this issue to be aired now, rather than by President Obama in the fall.
"I don't want to be out there defending practices that put people out of work," he said. "My point is, if we're going to be the party of positive job growth, we need to be really careful about creating these types of situations."
At a stop in Summerville, S.C., Perry supporter Barbara Schimp told the governor to "lay off" the Bain attack, because it sounds anti-business. "Roger that," the Texan said with a wink.
Mr. Romney has said that what Bain did was no different from what Mr. Obama did with General Motors Co. and Chrysler LLC when the government bailed them out but required plants and dealerships to be shut down, costing jobs.
White House spokesman Jay Carney said the administration acted in order to save the industry, which preserved most jobs, though he would not make a comparison to Mr. Romney's time at Bain.
"I think what our action was designed to do and did do was prevent the elimination of up to 1 million jobs in the automobile industry and create a situation where that industry is now creating jobs again. So I think that's an important story to tell," he said.
Ironically, the political attacks seem to be helping Mr. Romney. Prominent party leaders, fundraisers and the U.S. Chamber of Commerce's president have come to his defense, saying the criticism amounts to an attack on the free-market system.
Two of Mr. Romney's rivals in the 2008 presidential race — former Arkansas Gov. Mike Huckabee and former New York Mayor Rudolph W. Giuliani — criticized their fellow Republicans' attacks.
Mr. Huckabee called it "surprising to see so many Republicans embrace that left-wing argument against capitalism," while Mr. Giuliani said he was "shocked ... I'm going to say it's ignorant. Dumb. It's building something we should be fighting — ignorance of the American economic system."
Barry Wynn, a top Republican donor and investment fund executive, pulled his support from Mr. Perry and threw it behind Mr. Romney, saying the Texan's comments went too far.
"I've been fighting for this cause most of my life," Mr. Wynn told AP. "It's like fingernails on the chalkboard. It just kind of irritated you to hear those kind of attacks."
Chamber of Commerce President Thomas J. Donohue shared a similar sentiment, saying he was "very disappointed" with the criticism of Mr. Romney's "extraordinary business experience."
"It is just foolish for the Republicans to carry on that line of attack because they're not doing anything other than set up the ad base for their opponents," Mr. Donohue said.
Mr. Stemberg called the attacks "perverse."
"The pluses so far outweigh the minuses. It's not even a close call," he said of Bain's investments.
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