How much does the public truly understand about the inner working of Bain Capital beyond the sound bites? Let me share my thoughts on the subject of Romney and Bain Capital, and why I think it’s a Rorschach test. Bain’s model was a typical private-equity play and somewhere between a venture firm and a merchant bank. Typically they were approached by, or approached firms, to help execute a turnaround or improvement program (and, yes, sometimes this involved a leveraged buyout). In addition to offering advice, Bain generally took an equity stake and would occupy one or several board seats. Sometimes, Bain partners become executive officers in the firm. Generally, they use their investors’ money to take these stakes. It is important to note here, however, that the Bain partners themselves are the largest single pool of investors – i.e. they have ‘skin in the game.’ What’s important about this model is that, other than the fairly nominal service fee they charge the investors, the firm’s profits are generated only when they increase the value of the firms they invest in and cash those investments out.