Perhaps, instead of being greedy, as he could have been, Romney shared the wealth with his seven other senior partners so that each had a one-eighth stake in Bain and its profits.
Or perhaps, during Romney’s years at the firm, Bain’s funds were smaller than those of its peers; although Bain now manages a whopping $65 billion, it did not have its first $1 billion fund until 1998, the year before Romney left. (By then, Blackstone was investing a nearly $4 billion fund, and KKR was investing a $6 billion fund.)
Or maybe, unlike other funds, Bain had to “aggregate” its losses on deals against its gains before taking its 30 percent profit — in other words, despite getting industry-leading fees, the Bain team’s overall investing track record may have been subpar.
Or, unlike KKR, Blackstone, Apollo and Carlyle, Bain has not (yet) decided to cash out by taking the firm public, which often multiplies the founders’ wealth since public-market values are generally higher than private ones.
Or perhaps Romney missed what Kravis called the “golden age” of private equity in the years before the financial crisis because he went off to run the 2002 Olympics and then the state of Massachusetts. (Bloomberg estimates that if Romney had stayed at Bain, his fortune would exceed $1.3 billion.)
He has also been exceedingly charitable with his wealth, although unlike several of his private-equity peers, he has not signed the Giving Pledge, which would commit him to giving most of his fortune to philanthropic causes.
We may never know the full extent of Romney’s fortune; he has not disclosed a longer history of his tax returns, and R. Bradford Malt, the lawyer at Ropes & Gray who manages the Romneys’ trusts, did not respond to an e-mail I sent seeking comment. But to me, while Romney’s departure from Bain and his willingness to spread his firm’s riches around may account for some of the difference between his wealth and that of other private-equity barons, I still can’t help but suspect that the $250 million figure underestimates Romney’s true wealth.
Does it really matter if Romney is worth $250 million, $1 billion or more? Rich is rich after all, right? I think it does, politically as well as substantively.
Politically, the alternatives are not great. If he were perceived as the first real billionaire to run for president, it would only exacerbate popular doubts about how someone living so removed from the concerns of average Americans — or even just 47 percent of them — could effectively represent them.
And if he is not a billionaire, doesn’t it suggest that he was not a great private-equity investor after all, thus torpedoing his claim to understand how to create jobs and get the economy back on track?
Something to keep in mind on Nov. 6.
William D. Cohan, a columnist for Bloomberg View, is the author of “Money and Power: How Goldman Sachs Came to Rule the World” and “House of Cards: A Tale of Hubris and Wretched Excess on Wall Street.” He has worked at Lazard Freres, Merrill Lynch and JPMorgan Chase.
Read more from Outlook:
The candidates’ message: I might be so-so, but the other guy is terrible
When Romney ran Bain Capital, his word was not his bond
To beat Obama, Romney must channel Rick Santorum
If Obama loses the election, here’s why
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