01 Jun 1997

Bruce Rauner (MBA '81) Endows New Professorship

by James E. Aisner


Bruce V. Rauner recently celebrated his 15th HBS Reunion in a big way, establishing a professorship in business administration at HBS that bears his name. At 40, he is one of the youngest alumni in the School's history to create an endowed faculty position.

"I saw no reason to hold off until I was older or retired to share my good fortune," says Rauner, managing principal of Golder, Thoma, Cressey, Rauner, Inc. (GTCR), a Chicago-based private equity firm that specializes in acquiring and consolidating service businesses in highly fragmented industries. "For quality institutions, time matters. Why make them wait to implement their vision? Helping Harvard - to which I feel a deep sense of gratitude in terms of my career and personal development - is especially satisfying and enjoyable for me at this stage of my life."

When Rauner entered Dartmouth College in 1974, he planned to major in biology and chemistry to prepare for a career related to helping the environment. An introductory course in economics changed all that. "I realized that economic issues drove many of the decisions companies made regarding environmentalism and other important matters," Rauner says. "By my junior year, I was eager to go into business, become as successful as I could, and then use my resources as much as I could to help social causes that were important to me, especially those relating to education and the environment."

"I saw no reason to hold off until I was older or retired to share my good fortune."

"I saw no reason to hold off until I was older or retired to share my good fortune."

After college, Rauner wasted little time enrolling at HBS, entering the School at age 23. Midway through the second year of the MBA Program, he was recruited by Stan Golder, a veteran of the First National Bank of Chicago, who was launching his own venture-capital firm with a couple of other colleagues from the bank. After graduating from HBS, Rauner headed back to his hometown of Chicago and became one of the first associates in what was then known as Golder, Thoma, Cressey.

Having put together an initial venture fund of $60 million (at that point the largest private equity fund ever raised), the new firm began doing deals in a wide range of enterprises. But in the early 1980s, as the VC business became more and more competitive, GTCR decided to focus on service companies in basic businesses such as laundry equipment, propane distribution, and funeral homes. "We may, for instance, try to find an existing company with a great management team that needs our resources to buy a competitor," explains Rauner, who became a principal in the firm in 1984 and whose name went on the door in 1987. "Or we may identify exceptional talent in a particular industry," he continues, "set them up with equity in a new operation that's backed by our capital, and then let them go forth, make purchases, and grow."

A pioneer in this long-term strategy (which began with an investment in Paging Network, Inc. [PageNet], now the world's largest wireless messaging company), GTCR now manages some $1.2 billion in five funds, with excellent results. Over the past decade, it has reaped returns of roughly 30 percent on companies it retains in its portfolio for an average of eight years before selling them or taking them public.

As the firm's managing principal, Rauner concentrates not only on investing in companies and helping them develop in conjunction with their top management but on nurturing a corps of young associates - the source of GTCR's next generation of leaders. Rauner expects to focus on GTCR for another decade or so before transferring his talents completely to the nonprofit sector or even politics.

"I care enough about this country and the issues confronting it that I want to get directly and personally involved," he says. "One thing I don't want to do later in my life is look back and say I was awfully good at investing and promoting entrepreneurship, but that's all I did."


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