Mitt Romney and the ESOP at Bain

Mitt Romney left Bain & Company in 1984 to lead the spinoff of the private equity company Bain Capital. The following year, Bain & Company set up a leveraged ESOP, which bought 30% of the company from its founding members for $200 million. Romney was not part of the ESOP and appears not to have had a role in its establishment. Bain Capital did, however, receive investments from Bain & Company founders, some of which came from the cash they received in the ESOP transaction. In the following years, Bain & Company's profitability and stock price suffered due to a number of factors, including the size of its debt and its involvement in a scandal involving alleged manipulation of stock prices. In 1990 Romney returned to Bain & Company as CEO, and this time he was intimately involved in the ESOP, leading negotiations that resulted in a dramatic restructuring of the company's ownership. According to Dirk Halacher's 2012 "The Governance of Professional Service Firms," "The founding group [of Bain & Company] abandoned their remaining 70% equity stake and returned about $100 million gained in the previous sale of the 30% stake. Under the new ownership structure, 40% of the equity was held by the ESOP and 60% held directly by 75 senior professionals."