Mitt Romney's Bain Capital Days, In 2 Stories : Planet Money Bain's failed effort to build a paper empire. Also: How Bain transformed a struggling company, in five steps.
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2 Stories From Mitt Romney's Days At Bain

Mitt Romney, back in his Bain Capital days. David L. Ryan/Boston Globe via Getty Images hide caption

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David L. Ryan/Boston Globe via Getty Images

Mitt Romney's time at Bain Capital is back in the news this week. We did two stories earlier this year on deals Bain did while Romney was running the firm — one of those deals went badly, the other one worked out well. Here are excerpts, and links to the full stories.

How Mitt Romney's Firm Tried — And Failed — To Build A Paper Empire

When you buy a house, you put down a bit of your own money. But typically you borrow most of the money. That's what Bain did in 1992, when it bought American Pad and Paper: $5 million down, $35 million in bank debt.

"We were highly leveraged as a company," says Russell Gard, the guy who Bain brought in to run the company. "Like, squeaky leveraged. We were tight." ...

Jerry Rayburn, who worked on the factory floor at SCM, remembers the day when Bain took over. "We knew something was going on when, toward the end of the day, we saw all the security guards starting to surround the plant," he says.

Then employees were told the company had been acquired by Ampad, and they had all been terminated. They were told they were welcome to re-apply for their own jobs.

"You could hear a pin drop," Rayburn says. "Everybody was in shock."

Most people did reapply, but things were different. The union was over. Lots of employees took a pay cut. Plant rules were different. The workers went on strike. ...


How Mitt Romney's Firm Transformed A Struggling Company, In 5 Steps

Step 1: Find a little company that's lost inside a big company.

In 1995, Wesley Jessen was a struggling division of Schering Plough, a big drug company. "We were not a very profitable company at all," says Bill Flynn, who worked in Wesley Jessen's finance division at the time. ...

Bain saw potential in the company. So they came in and bought it. Like most private equity deals, it was done mostly with borrowed money. Bain put $6.5 million down, and borrowed another $43 million.

Now, they had to pay interest on all that debt, while turning the company around. The key to doing so:

Step 2: Hire the right leader.

Bain brought in a guy named Kevin Ryan to run Wesley Jessen. He's widely admired as a smart, charismatic, hard-working exec. ...

For More: Listen to our podcast, What Do Private Equity Firms Actually Do?