By James E. Aisner

Special to the Gazette

Bruce V. Rauner (MBA '81), who celebrated his 15th Reunion at the Business School last June, has given HBS plenty of reason to celebrate. He recently put the finishing touches on a major gift to establish a professorship in business administration that bears his name. At 40, he is one of the youngest alumni in the School's history to create an endowed faculty position. The chair's first incumbent will be chosen at a later date.

"I saw no reason to hold off until I'm 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."

"We are enormously grateful to Bruce for his generous support of the School," comments Business School Dean Kim Clark. "Less than two decades after leaving Soldiers Field, he has made his mark as an outstanding leader in business, working with entrepreneurs who are shaping this nation's economy. Now, through this professorship, he is making a lasting impact on the research and course development that are the heart of the Harvard Business School's mission."

When Rauner entered Dartmouth College in 1974, he planned to major in biology and chemistry. He wanted to prepare himself for a career related to helping the environment -- a natural choice for a young man who had excelled at math and science in high school and whose favorite pastimes were hiking, camping, and backpacking. 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 an economics major with new goals in mind. 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."

Rauner has not waited long to make good on his intentions. Besides giving a chair to the Business School, over the past 18 months or so he has made other major donations to support a special collections library at Dartmouth and a professorship at Morehouse College in Atlanta.

Rauner jumped on the fast track early. Entering the School at the age of 23, he received a job offer from Bain and Co. after a summer stint at the management consultancy. Although he expected to join the firm full-time after graduation, it didn't turn out that way because of a letter he received unexpectedly midway through the second year of the M.B.A. program.

"A fellow named Stan Golder, a veteran of the First National Bank of Chicago, wrote that he was launching his own venture capital firm with a couple of other colleagues from the bank," Rauner remembers. "He said he had seen my resume and wanted to talk with me when he came on campus to recruit." The opportunity to join a startup and work with entrepreneurs in a variety of industries seemed too good to be true and impossible to refuse. Meeting with Golder a short time later, Rauner liked what he saw, and vice versa. The die was cast. Upon graduation, he would head back to his hometown of Chicago and be 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, including high tech, low tech, startups, turnarounds, and leveraged buyouts. As the venture capital business became more and more competitive in the early eighties, however, it seemed advantageous for Golder and his colleagues to narrow their target. "In the long run," Rauner explains, "we didn't think we could sustain being all things to all people. Instead, we looked carefully at what we were good at, what we enjoyed, and where in our portfolio we had the best risk-reward tradeoff."

Their answer: Identifying service companies -- often mom-and-pop operations in such basic businesses as laundry equipment, propane distribution, and funeral homes -- and eliminating their inherent inefficiencies through acquisitions that create synergies and economies of scale.

There are several ways of doing this, says Rauner, who became a principal in the firm in 1984 and whose name went on the door in 1987. "We may try to find an existing company with a great management team that needs our resources to buy a competitor, for instance, or we may identify exceptional talent in a particular industry, set them up with equity in a new operation that's backed by our capital, and then help them go forward, make purchases, and grow."

Pioneers 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. In keeping with the firm's philosophy of hands-on involvement in its investments, he also serves on numerous boards. "The rest of my time belongs to my family," Rauner adds with a smile, rattling off the names and ages of his five children. "When I'm not in the office or traveling, I enjoy coaching their soccer and basketball teams or trying to help the local schools deal with their challenges."

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," he says, " that I want to get directly, personally involved. 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." Bruce Rauner wants to make a difference in this world. The fact of the matter is, he already has.