Bain Capital, LP is an American private investment firm based in Boston, Massachusetts, with around $185 billion of assets under management. It specializes in private equity, venture capital, credit, public equity, impact investing, life sciences, crypto, tech opportunities, partnership opportunities, special situations, and real estate. Bain Capital invests across a range of industry sectors and geographic regions. The firm was founded in 1984 by partners from the consulting firm Bain & Company. The company is headquartered at 200 Clarendon Street in Boston with 24 offices in North America, Europe, Asia, and Australia.
Since its establishment, Bain Capital has invested in or acquired hundreds of companies, including AMC Theatres, Artisan Entertainment, Aspen Education Group, Apex Tool Group, Brookstone, Burger King, Burlington Coat Factory, Canada Goose, DIC Entertainment, Domino's Pizza, DoubleClick, Dunkin' Donuts, D&M Holdings, Guitar Center, Hospital Corporation of America (HCA), iHeartMedia, ITP Aero, KB Toys, Namirial, Sealy, Sports Authority, Staples, Toys "R" Us, Virgin Australia, Virgin Voyages, Warner Music Group, Fingerhut, Athenahealth, The Weather Channel, Varsity Brands and Apple Leisure Group, which includes AMResorts and Apple Vacations. The company and its actions during its first 15 years became the subject of political and media scrutiny as a result of co-founder Mitt Romney's later political career, especially his 2012 presidential campaign.
In June 2023, Bain Capital was ranked 13th in Private Equity International's PEI 300 ranking of the largest private equity firms in the world.
History 1984 founding and early history Bain Capital was founded in 1984 by Bain & Company partners Mitt Romney, T. Coleman Andrews III, and Eric Kriss, after Bill Bain had offered Romney the chance to head a new venture that would invest in companies and apply Bain's consulting techniques to improve operations. In addition to the three founding partners, the early team included Fraser Bullock, Robert F. White, Joshua Bekenstein, Adam Kirsch, and Geoffrey S. Rehnert.Bain & Company Profile. Funding Universe, 2000 Romney initially held the titles of president and managing general partner or managing partner. He later became referred to as managing director or CEO as well. He was also the sole shareholder of the firm.Romney, Turnaround, pp. 15–16. At the time, the firm had fewer than ten employees.
In the face of skepticism from potential investors, Romney and his partners spent a year raising the $37 million in funds needed to start the new operation. Bain partners put in $12 million of their own money and sourced the rest from wealthy individuals. Early investors included Boston real estate mogul Mortimer Zuckerman and Robert Kraft, the owner of the New England Patriots football team. They also included members of elite Salvadoran families such as Ricardo Poma whose capital fled the country's civil war. They and other wealthy Latin Americans invested $9 million primarily through offshore companies registered in Panama.
While Bain Capital was founded by Bain executives, the firm was not an affiliate or a division of Bain & Company but rather a completely separate company. Initially, the two firms shared the same offices—in an office tower at Copley Place in BostonKranish; Helman, The Real Romney, p. 133.—and a similar approach to improving business operations. However, the two firms had put in place certain protections to avoid sharing information between the two companies and the Bain & Company executives had the ability to veto investments that posed potential conflicts of interest. Bain Capital also provided an investment opportunity for partners of Bain & Company. The firm initially gave a cut of its profits to Bain & Company, but Romney later persuaded Bill Bain to give that up.
The Bain Capital team was initially reluctant to invest its capital. By 1985, things were going poorly enough that Romney considered closing the operation, returning investors' money to them, and having the partners go back to their old positions.Kranish; Helman, The Real Romney, p. 138. The partners saw weak spots in so many potential deals that by 1986, very few had been done.
At first, Bain Capital focused on venture capital opportunities. One of Bain's earliest and most notable venture investments was in Staples, Inc., the office supply retailer. In 1986, Bain provided $4.5 million to two supermarket executives, Leo Kahn and Thomas G. Stemberg, to open an office supply supermarket in Brighton, Massachusetts."Growth in Office-Supply 'Supermarkets' Threatens Tough War for Market Share". The Wall Street Journal, December 1, 1988 The fast-growing retail chain went public in 1989; by 1996, the company had grown to over 1,100 stores,Staples Inc. Company Profile. Funding Universe, 2002 and as of fiscal year-end January 2012, Staples reached over $20 billion in sales, nearly $1.0B in net income, 87,000 employees, and 2,295 stores.Securities & Exchange Commission: January 2012 10-K for Staples Inc retrieved October 28, 2012 Bain Capital eventually reaped a nearly sevenfold return on its investment, and Romney sat on the Staples board of directors for over a decade. Another very successful investment occurred in 1986 when $1 million was invested in medical equipment maker Calumet Coach, which eventually returned $34 million. A few years later, Bain Capital made an investment in the technology research outfit the Gartner Group, which ended up returning a 16-fold gain.
Bain invested the $37 million of capital in its first fund in twenty companies and by 1989 was generating an annualized return in excess of 50 percent. By the end of the decade, Bain's second fund (raised in 1987) had deployed $106 million into 13 investments.Counselor To The King. New York Times, September 24, 1989 As the firm began organizing around funds, each such fund was run by a specific general partnership—that included all Bain Capital executives as well as others—which in turn was controlled by Bain Capital Inc., the management company that Romney had full ownership control of. As CEO, Romney had a final say in every deal made.
1990s In the 1990s, Bain Capital started several affiliates that supported its private equity and other assets classes. The long-short equity hedge fund, Brookside Capital, was founded in 1996 and, Sankaty Advisors, the company's fixed income affiliate, was started two years later. Building affiliates for the firm was directed by three conditions: that it leveraged its core skills; one of its Managing Directors has a leadership role; and, the new business invests in attractive asset class.
Beginning in 1989, the firm, which began as a venture capital source investing in start-up companies, adjusted its strategy to focus on leveraged buyouts and growth capital investments in more mature companies."Venture-Capital Funds Grow Larger and Larger - But Start-Up Companies Find They're Still Left Out in the Cold". The Wall Street Journal, September 7, 1989 Their model was to buy existing firms with money mostly borrowed against their assets, partner with existing management to apply Bain methodology to their operations (rather than the hostile takeovers practiced in other leverage buyout scenarios), and sell them off in a few years. Existing CEOs were offered large equity stakes in the process, owing to Bain Capital's belief in the emerging agency theory that CEOs should be bound to maximizing shareholder value rather than other goals. By the end of 1990, Bain had raised $175 million of capital and financed 35 companies with combined revenues of $3.5 billion.Bain Names Chief Executive And Begins a Reorganization. New York Times, January 30, 1991
In July 1992, Bain acquired Ampad (originally American Pad & Paper) from Mead Corporation, which had acquired the company in 1986. Mead, which had been experiencing difficulties integrating Ampad's products into its existing product lines, generated a cash gain of $56 million on the sale.Mead Corp. to Lay Off 1,000. New York Times, July 3, 1992 Under Bain's ownership, the company enjoyed a significant growth in sales from $106.7 million in 1992 to $583.9 million in 1996, when the company was listed on the New York Stock Exchange. Under Bain's ownership, the company also made a number of acquisitions, including writing products company SCM in July 1994, brand names from the American Trading and Production Corporation in August 1995, WR Acquisition and the Williamhouse-Regency Division of Delaware, Inc. in October 1995, Niagara Envelope Company, Inc. in 1996, and Shade/Allied, Inc. in February 1997. Ampad's revenue began to decline in 1997, and the company laid off employees and closed production facilities to maintain profitability. Employment declined from 4,105 in 1996 to 3,800 in 2000.Deseret News: 30 companies Mitt Romney's Bain Capital invested in from 1986-1998 - "American Pad & Paper" By Jackie Hicken June 17, 2012 The company ceased trading on the New York stock exchange on December 22, 2000, and filed for bankruptcy in 2001. At the time of the bankruptcy, Bain Capital held a 34.9% equity ownership interest in the company.SEC.gov Fiscal year end December 31, 1999 10-K for American Pad & Paper Company retrieved October 28, 2012 The assets were acquired in 2003 by Crescent Investments. Bain's eight years' of involvement in Ampad is estimated to have generated over $100 million in profits ($60 million in dividends, $45–50 million from the proceeds from stock issued after the company went public, and $1.5-2 million in annual management fees).
In 1994, Bain acquired Totes, a producer of umbrellas and overshoes.Totes is Bought By Boston Investment Firm. New York Times, June 28, 1994 Three years later, Totes, under Bain's ownership, acquired Isotoner, a producer of leather gloves.Totes To Buy A Majority Interest In Aris Isotoner. New York Times, June 6, 1997
Bain, together with Thomas H. Lee Partners, acquired Experian, the consumer credit reporting business of TRW Inc., in 1996 for more than $1 billion. Formerly known as TRW's Information Systems and Services unit, Experian is one of the leading providers of credit reports on consumers and businesses in the US.TRW Credit Reporting Unit To Be Sold for $1 Billion. Bloomberg Business News, February 10, 1996 The company was sold to Great Universal Stores for $1.7 billion just months after being acquired.Large British Retailer to Buy U.S. Credit-Data Company. New York Times, November 15, 1996 Other notable Bain investments of the late 1990s, included Sealy Corporation, the manufacturer of mattresses;Sealy to be Sold to Management and an Investor Group. New York Times, November 4, 1997 Alliance Laundry Systems;Raytheon in $358 million Deal to Sell Laundry Business. New York Times, February 24, 1998 Domino's PizzaDomino's Pizza Founder To Retire And Sell A Stake. New York Times, September 26, 1998 and Artisan Entertainment.Playing Movies Like a Growth Stock. New York Times, December 21, 1998
Much of the firm's profits was earned from a relatively small number of deals, with Bain Capital's overall success and failure rate being about even. One study of 68 deals that Bain Capital made up through the 1990s found that the firm lost money or broke even on 33 of them. Another study that looked at the eight-year period following 77 deals during the same time found that in 17 cases the company went bankrupt or out of business, and in 6 cases Bain Capital lost all its investment. But 10 deals were very successful and represented 70 percent of the total profits.