Bad Deeds: How Mitt Romney Became Successful

In 1994 Bain purchased Baxter International and renamed it Dade International. Bain partnered with Goldman Sachs for the deal. The company was purchased for $442 million, but since it was leveraged, Bain put in less than $30 million. They also charged the Dade a little under $100 million in management fees. Source: Forbes

In 1995, Bain contemplated either selling Dade, or buy one of its competitors and expand it. Selling would have meant a quick return on Bain’s investment, but Romney wanted to keep the company and “double down” on Dade. Source: New York Times

Bain wanted to sell Dade in 1999, but they couldn’t find an offer they liked. KKR offered $1.9 billion. So Dade took out loans so that it could buy out half of its share holders. Bain got $242 million and Goldman Sachs $121 million. Top Dade executives were paid $55 million. The total payout to shareholders was $420 million. Source: Forbes

Dade’s workers were very unhappy. From The NYT:

William T. Mowrey, a field engineer, after Dade bought the DuPont unit, his generous pension plan was replaced by a 401(k); his salary was cut by $2,000 a year and he was not paid for overtime. “They were just trying to milk as much out of us as they could,” he said.

Soon after Dade bought the DuPont unit, it closed a plant in Puerto Rico; all but a few of its nearly 300 workers were laid off.

Dade persuaded a dozen of the Puerto Rico workers to move to Miami, where Dade had another plant. Not long after the workers arrived, the company said it would close that factory, too and declined to help the workers return to Puerto Rico.

In 2002 Dade filed for bankruptcy, 1700 jobs had been lost in the U.S. The company had simply incurred too much debt, about $1.5 billion of it. From the LA Times:

“When I listen to Mitt Romney these days, he talks about creating jobs. My experience at Dade during those Bain Capital years was that it was strictly an investment, not to create jobs,” said Michael Rumbin, a vice president of technology management at Dade during the Bain years whose position was eliminated in 2000.

“No one came from Bain and said, ‘How can we hire more people?’ ” Rumbin said. “It was, ‘How do we turn our investment around and make a lot of money?’ Which they did.”

Bain was forced to relinquish its stake in Dade in the bankruptcy. Romney was charged with “unjust enrichment.” Source: Forbes

Meanwhile, as it was going through turmoil and cutting jobs in the U.S., Dade was hiring abroad. Source: New York Times

Summary: Leveraged buyout, borrowing, gambling with other people’s money, layoffs, broken promises to workers, too much debt, bankruptcy, unjust enrichment, sending jobs overseas.

Regards,

Jim