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Herman Cain has nothing on Mitt Romney.

Boris D. 2012/01/28 05:37:51
Venture capitalists and their investments are good for America. Why are Republicans attacking them?
Venture capitalists are vultures, only out to pick the bones of failing companies.
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Bain delivered Domino's turnaround

Romney's equity firm doubled work force and profits, hired Brandon

By Jaclyn Trop
The Detroit News









In 1998, Thomas S. Monaghan, founder and chairman of Domino’s, left, and Mitt Romney, managing director of Bain Capital, sign a sale agreement.
In 1998, Thomas S. Monaghan, founder and chairman of Domino’s, left, and Mitt Romney, managing director of Bain Capital, sign a sale agreement.


Mitt Romney's job record at Bain Capital is drawing scrutiny as the Republican vies for his party's presidential nomination and has put a spotlight on one of Michigan's most well-known companies: Ann Arbor-based Domino's Pizza Inc.

Romney's campaign has talked up Bain's role in resuscitating Domino's. True?



"To me, it's a largely positive story of how a private equity firm helped right a ship and move it in a direction that not only created wealth but added jobs," said Tom Gordy, senior managing director at Variant Capital Advisors LLC, an investment banking firm in Birmingham.



Domino's was the only Michigan company in which Massachusetts-based Bain directly invested during Romney's reign at the firm he co-founded in 1984 and ran as CEO. Romney was at Bain for one year of its 12-year investment in Domino's. Private equity firms raise money from investors to buy or acquire significant stakes in private companies they think they can better manage and make money on.

Romney says Bain created more than 100,000 jobs at companies in which it invested. He highlights Domino's as well as Sports Authority and Staples — non-Michigan companies with stores here — as fueling significant employment growth.



Romney left Bain in February 1999 but not before Bain tapped David Brandon as Domino's CEO. The Boston private equity firm relinquished ownership with an initial public offering of stock in July 2004, but kept a significant minority stake in Domino's. It divested its remaining 15 percent stake in November 2010, according to Domino's.

Democrats and some Republicans — including Romney's presidential primary rival, Newt Gingrich — blast Romney and Bain as "exploitative" investors.

Last week, U.S. Rep. John Dingell, D-Dearborn, said Romney's tenure at Bain "shows us that his goal was to make money for his investors while giving out pink slips."

But supporters and private equity experts argue Bain Capital strengthened Domino's business.

Domino's doubled its work force, sales and profits since Bain purchased a $1.1 billion controlling stake, said Brandon, who led Domino's turnaround after leaving Livonia's Valassis Communications Inc.

In March 2010, after 11 years, Brandon departed Domino's to become the athletic director at the University of Michigan.



A year after Brandon took over, Domino's reported a more than 1,000 percent increase in profit, to $25 million, in 2000.

"I am proud of the results we have achieved in reducing our costs. I am proud of our continued progress in net store growth," Brandon said then in the annual earnings statement, but added he was dissatisfied with flat growth in domestic same store sales.

In 2000, Brandon eliminated 100 jobs and jettisoned scores of underperforming stores.

"Innovation isn't always pretty," said David Brophy, director of the Center for Venture Capital and Private Equity at the University of Michigan's Ross School of Business. "That's the way our economy grows. You've got to break eggs to make omelets."



As profits continued to grow, Bain took the company public in July 2004, but sold its first shares at $14 instead of the $15 to $17 it anticipated. Domino's shares closed Thursday at $32.20.

The onset of the national recession in 2008 cut profits and helped trigger a plunge in domestic sales. Domino's executives also determined their pizzas had become stale and two years ago successfully reinvented its pizza recipe and public image with an aggressive marketing approach.

Now, "the company is literally twice as large as when they (Bain) bought it in terms of sales, number of stores and employees," Brandon said. "We're more than double in profitability."

But opponents continue to bore in on Romney's private equity record.

The Democratic National Committee aired a television ad this month declaring "Mitt Romney has a record of destroying the economic lives of companies, individuals and entire communities as a corporate buyout specialist."

The commercial showed clips from Republicans such as former presidential candidate and current Texas Gov. Rick Perry, who labeled Romney a "vulture capitalist" and subsequently endorsed Gingrich.

Bain and the Romney campaign did not respond to The Detroit News' requests for comment for this report. Brandon, a Republican, defended Bain.

"Politics is politics, and it's mean, it's nasty and it's cruel," Brandon said. "But as it relates to Bain Capital, they just don't deserve to be dragged through the mud. It's grossly unfair."

Bain allowed Brandon to invest in growing Domino's, which opened thousands of new shops and pumped $20 million into its Ann Arbor headquarters "at a time when many of the Michigan-based companies were looking elsewhere for their headquarters," he said.

The firm also invested tens of millions of dollars in Domino's Web-based infrastructure, which accounts for a quarter of the firm's orders worldwide, Brandon said.

"You don't make money by firing people," he said.

"You make money by hiring smart people."



jtrop@detnews.com

(313) 222-2575
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Top Opinion

  • wicked soda boy 2012/01/28 07:23:30
    Venture capitalists and their investments are good for America. Why are Repub...
    wicked soda boy
    +4
    You know what? I would rather have an inovative, successful businessman like Romney in the White House than any of the other GOP candidates, and certainly more than the current occupant.
    Did Romney have a Cayman Islands account? Yes? OK, good for him!
    Did Romney have a Swiss bank account and only now admit it? Hooray!

    This is the kind of smart guy I want as my next POTUS - someone who is smart enough to know about WORLD BANKING AND WORLD ECONOMICS.

    What I DO NOT WANT is a guy who PRETENDS he is looking out for the middle-class (when he really means only union-worker middle-class) and the "least among us" while promoting $30,000 per plate dinners among cronies who support his big-pharma, big-banking, big union labor agenda! No- nada- zero!!!!!

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  • ready46xwu 2012/02/01 20:02:37
    Venture capitalists and their investments are good for America. Why are Repub...
    ready46xwu
    I have 'witnessed both'!
    I've seen, new investors & management turn companies around!
    And, I've seen them 'lift the cream', and close the doors!
  • Steve J~PWCM~JLA 2012/01/28 15:48:10
    Venture capitalists and their investments are good for America. Why are Repub...
    Steve J~PWCM~JLA
    +1
    Republicans are attacking out of jealousy.
  • Steve J... Steve J... 2012/01/28 15:49:12
    Steve J~PWCM~JLA
    +3
    PS, I like Godfather pizza much better.
  • Boris D. Steve J... 2012/01/28 17:19:34
  • Steve J... Boris D. 2012/01/28 17:39:03
    Steve J~PWCM~JLA
    +1
    Thank you, when can I expect delivery?

    Long time no see, my friend.

    Hope all is well.
  • Boris D. Steve J... 2012/01/28 19:47:48 (edited)
  • GANGA~Patriotic Revolution ... 2012/01/28 12:21:22
    Venture capitalists and their investments are good for America. Why are Repub...
    GANGA~Patriotic Revolution BL-100+
    +3
    I'll take a venture capitalist over a vulture socialist any day!

    obama vulture socialist
  • Boris D. GANGA~P... 2012/01/28 19:48:57
  • GANGA~P... Boris D. 2012/01/28 21:24:42
    GANGA~Patriotic Revolution BL-100+
    +1
    LOL! Good one! :)
  • HOMBRE Boris D. 2012/01/28 21:29:00
  • Boris D. HOMBRE 2012/01/29 20:23:47
  • wicked soda boy 2012/01/28 07:23:30
    Venture capitalists and their investments are good for America. Why are Repub...
    wicked soda boy
    +4
    You know what? I would rather have an inovative, successful businessman like Romney in the White House than any of the other GOP candidates, and certainly more than the current occupant.
    Did Romney have a Cayman Islands account? Yes? OK, good for him!
    Did Romney have a Swiss bank account and only now admit it? Hooray!

    This is the kind of smart guy I want as my next POTUS - someone who is smart enough to know about WORLD BANKING AND WORLD ECONOMICS.

    What I DO NOT WANT is a guy who PRETENDS he is looking out for the middle-class (when he really means only union-worker middle-class) and the "least among us" while promoting $30,000 per plate dinners among cronies who support his big-pharma, big-banking, big union labor agenda! No- nada- zero!!!!!
  • AMo45 2012/01/28 06:45:19
    Venture capitalists and their investments are good for America. Why are Repub...
    AMo45
    +3
    Viva Capitalism! Only an idiot would fail to see that Romney's business sense is exactly what America needs.His critics,unfortunately including republicans spout off that some companies failed .While true they fail to realise that downsizing -the knowledge to know where and what can be cut to run efficiently and which entities are not salvageable being simply ineffective would be essential to making the necessary cuts in government.And to the liberals let's look at what dogs obama has chosen to invest our taxpayer dollars in and how much our debt has increased as opposed to Romney taking Bain from a 37 million dollar company to now approx.66 Billion. romney MR12
  • Boris D. AMo45 2012/01/28 17:17:13 (edited)
    Boris D.
    Have a slice on me.
    Pizza mitt
  • Boris D. 2012/01/28 05:40:29
    Venture capitalists and their investments are good for America. Why are Repub...
    Boris D.
    +4
    I like pizza.

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