Although Romney would later point to Staples as a key example of the kind of job-creating, forward-looking enterprise he made his living in, venture capital deals like Staples soon became only a small part of his firm's business, in favor of leveraged buyouts.
Venture deals invest in start-ups in the hope they hit it big. Leveraged buyouts combine small amounts of investors' money with large amounts of borrowed money to buy established companies.
Leveraged buyouts played to Bain Capital's analytical strengths and Romney's caution. If venture investing requires vision, leveraged buyouts demand precision. To determine how much to pay, and hence to borrow, buyout firms must figure out how much cash their targets can generate. Over8estimate cash flow by just a few percentage points, and the company misses debt payments and plunges into bankruptcy.
Despite the success of Staples, the venture capital world had too many unknowns for Romney's taste. So he steered the firm to focus squarely on leveraged buyouts.