In an exclusive interview with Business Insider, D. Van Skilling, the CEO of Experian at the time of the Bain buyout, explained how the deal went down, and told us why he thinks the Obama campaign isn't telling the whole story about Romney's time at Bain.
Like many of the companies Bain acquired, Experian Information Solutions began as a successful, but neglected, subsidiary of a larger corporation, in this case defense giant TRW. While the information services division was profitable and poised for growth, it had little in common with the core defense and automotive parts business of its corporate parent, according to Skilling.
"We were, in size, the smallest of the three segments, but we were actually producing a lot of cash, and the cash was being used to grow the automotive and the space and defense segments, rather than being reinvested in the information systems," Skilling told Business Insider. "So I said 'Either play me or trade me.'"
TRW decided on the latter, so Skilling and about 60 other Experian executives went looking for a buyer, and finally settled on a $1.01 billion offer from Bain Capital and Thomas Lee, another Boston-based buyout firm. The deal was mostly financed by debt, Skilling said, with each of the firms investing only about $100 million.
Apart from being the right price, the Bain-Thomas Lee offer was attractive because the investment group planned on keeping the company whole, and took a more gentle approach than a lot of other leveraged buyout firms at the time, Skilling said. The investment group, like the Experian executives, saw a potential for growth in the credit reporting market, particularly in the nascent direct marketing sector.
"It was good business -- it produced a lot of cash, it was profitable, and it had excellent growth potential," Skilling said. "They were keeping the business whole, which was good for the employees and good for our customers," Skilling said. "We were looking for opportunities for growth."
What happened next was pretty standard for Bain deals: The firm installed two of its own men on Experian's board of directors -- including longtime Romney confidante/alter ego Bob White, now a senior advisor to the campaign -- and started looking for possible growth opportunities, mostly in overseas credit reporting markets and consumer marketing.
But just seven weeks after the buyout, British conglomerate Great Universal Stores -- the parent company of one of Experian's acquisition targets -- offered to buy Experian for $1.7 billion in order to grow its own consumer credit reporting division, CCN. The company had expressed interest in acquiring Experian before the Bain buyout but had never been able to reach a deal with TRW. But the Bain buyout, combined with a personnel change that put Margaret Thatcher's former chief of staff David Wolfson at the helm of Great Universal Stores, put the British retail giant in the position to try again.