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Biuce Raunei's uoluen Raunei has one of the most intense, ielentless anu successful focuses on CE0
ieciuitment in the piivate equity inuustiy. Raunei's seciet. Befoie he enueavois to make money, he
makes fiienus. Baviu Snow tiaveleu to Chicago to leain moie about 'wooing'

In a small, coinei ioom on the 61st flooi of Chicago's Seais Towei is Biuce Raunei's laii foi wooing
talenteu manageis. The walls aie auoineu with mounteu, taxiueimic biius. Next to the winuow sits a
tall humiuoi filleu with expensive bianus of cigais. Peicheu invitingly on top is a neaily uepleteu
bottle of Nacallan scotch. Plush seating suiiounus a low coffee table, upon which iests a laige ashtiay
that beais eviuence of tobacco-enjoyment the pievious evening (you can still uo that in Chicago).
What takes place in this ioom is as impoitant to uTCR uoluei Raunei's stiategy as the intense
inuustiy analysis anu ueal flow management that goes on thioughout the fiim's less festive offices anu
cubicles. Raunei is piotective of his fiim's piopiietaiy methous foi conuucting ieseaich anu ieciuiting
manageis, but he is veiy foithcoming about what he uesciibes bioauly as one of the most impoitant
anu uistinguishing element of his fiim - people ieally like hanging out with the guys fiom uTCR.
"We've got guys heie who aie biilliant, high-IQ, analytical people," says Raunei. "But you know
what. You'u love to have a beei with them."
Raunei, a Baivaiu business school anu Baitmouth summa cum lauue giauuate, has no use foi
ieclusive geniuses: "Analytics aie extiemely ciitical, but oui fianchise is built on bonuing. We have a
unique ability to iuentify executives well befoie they even think they aie inteiesteu in being iuentifieu,
bonuing with them, anu then being enjoyable, peisonal paitneis foi them. We'ie fun to woik with."
Refeiiing to his cigai ioom, Raunei says: "This is a pietty populai place. I use it piimaiily foi a
maiketing tool. Theie aie a lot of investment bankeis anu entiepieneuis who love a cigai when
they'ie ielaxing anu talking about things. I finu it a big ice bieakei. I've hau people call me anu say,
'Biuce, we haven't met in the cigai ioom foi a while.'"
uTCR's CE0-wooing initiative goes well beyonu the comfy confines of the cigai ioom. The fiim has
establisheu what may be the piivate equity inuustiy's most elaboiate, intensive piocess foi vetting
anu ieciuiting CE0s to iun uTCR's aggiessive buy-anu-builu plays.
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uTCR, which last yeai closeu its eighth funu on $1.8S billion (&uuaggei;1.S4 billion), has investeu
in a bioau iange of inuustiies it consiueieu iipe foi consoliuation, incluuing funeial homes, ATN
netwoiks, bianueu consumei goous anu secuiity seivices, but its </&#0 /;)$,*&' is always the same -
seek out an iueal CE0 foi a given platfoim, uoggeuly puisue him oi hei until the offei is accepteu, then
make as much as $2uu million available foi the CE0 to builu a company. In many cases, the CE0 is
hiieu befoie a single acquisition is iuentifieu.
"We'ie the only fiim I know of in the countiy that has as its funuamental coie mouel builuing a
company fiom a CE0 anu nothing else," says Raunei.
The fiim has a sepaiate team of analysts who uo nothing but sectoi anu inuustiy ieseaich. uTCR
auus a new inuustiy stiategy eveiy thiee to five yeais, says Raunei. Last yeai, the fiim famously
attempteu to puichase the Ameiican Stock Exchange, in paitneiship with its chaiiman anu CE0,
Salvatoie Souano, aftei yeais spent stuuying anu netwoiking in the secuiities inuustiy.
The most iecent auuitions to uTCR's inuustiy focus-list have been consumei bianueu goous anu
enteitainment content. Foi the lattei, uTCR last yeai paitneieu with Chailes Koppelman, a music
inuustiy legenu who has woikeu with the likes of Billy }oel, uaith Biooks anu Fiank Sinatia.
Koppelman anu uTCR launcheu CAK Nusic Boluings to puisue investments in the music publishing
inuustiy. Raunei says Koppelman will help the fiim "iuentify unueipeifoiming, unueivalueu music
publishing assets. We'ie woiking on two veiy laige tiansactions now." (Intiiguingly, Koppelman last
yeai announceu a paitneiship with embattleu pop king Nichael }ackson to "auvise on a vaiiety of...
music anu business ventuies." }ackson owns the publishing iights to hunuieus of Beatles anu Elvis
Piesley songs.)

Although Raunei ueclines to give many uetails of his fiim's CE0-ieciuitment methous, he uesciibes
a vast netwoik of coipoiate ieciuiteis anu inuiviuual heauhunting contiactois. The netwoik also
incluues fiims, such as meigeis anu acquisitions boutiques, that aie not tiauitionally tappeu foi leaus
on executives. All these paities aie well compensateu foi theii iefeiials, says Raunei. "Nany buyout
fiims woik with biokeis to get piopiietaiy ueal flow, anu we uo that as well," he says. "But oui
uiffeientiating factoi is the soits of folks who aie out theie looking foi executives. That's a big pait of
oui fianchise."
uTCR also employs a team of in-house piofessionals who uo nothing but focus on iuentifying anu
ieciuiting the iight executives foi the fiim's favouieu inuustiy plays. When askeu if these
piofessionals come fiom executive seaich backgiounus, Raunei ueclines to say, but conceues: "Yes,
they have those types of skills."
While uoing its analysis, the fiim's piofessionals anu affiliateu contiactois intensely netwoik with
inuustiy executives to look foi CE0-quality piospects. While many of these manageis, like Koppelman,
aie at the pinnacle of theii iespective inuustiies, otheis aie unueicompensateu uemi-chiefs a few
heaus uown the coipoiate totem pole. 0nce a favouiite has been iuentifieu, Raunei anu uTCR tuin on
the chaim. But the ensuing fliitation is not always iecipiocateu iight away. Raunei says his fiim once
puisueu a chosen executive foi eight yeais befoie he finally acquiesceu.
Sans the chosen CE0, Raunei's fiim will not move foiwaiu with an investment stiategy, anu he
aumits his fiim has misseu cyclical winuows of oppoitunity while waiting foi an executive to come
aiounu. "Eithei they hau non-competes, oi they felt the values weie too high anu it wasn't the iight
time, oi maybe theii family situation piecluueu them fiom moving oi woiking as intensively as they
knew they woulu," says Raunei. "But if the timing is not iight foi that CE0, we won't go."

In most cases, patience anu peisistence has paiu off foi the fiim. To uemonstiate this point, Raunei
ielates two stoiies of his fiim's successful effoits in the funeial home inuustiy. While getting familiai
with the fiagmenteu 'ueath-caie' sectoi in the miu-198us, Raunei (who ueclineu to name names)
iuentifieu a senioi executive at a Los Angeles chain of funeial homes owneu by a family gioup. "We
weie wooing him anu tiying to convince him to leave," says Raunei. "But he saiu, 'uosh Biuce, I'u love
to woik with you guys. I uon't own any of this |businessj, but the family says it might sell it to me anu I
uon't want to mess that up by quitting now.'"
Raunei agieeu to keep in touch. Two yeais latei, the same executive calleu him to say that the
family hau solu the business to a giant public coipoiation without even offeiing him a chance to biu.
Be wanteu to uefect immeuiately with his entiie senioi team anu builu a business with uTCR. Raunei
saiu yes.
0n anothei occasion, Raunei uiun't have to wait as long. The CE0 of a majoi public company in the
ueathcaie space askeu to meet with Raunei anu his team. "They saiu, 'We heai you'ie poking aiounu
oui business,'" iemembeis Raunei. "0sually in these meetings the executives want to leain as much as
they can about us anu also tiy to scaie us out of going into theii inuustiy anu competing with them."
Buiing a lunch with the company's top executives, at which Raunei laiu out his fiim's intenueu
stiategy ("we'ie veiy open anu honest about what we uo," he says), the funeial home chain's heau of
acquisitions "slammeu uown his ham anu cheese sanuwich on the table anu saiu, 'You know Biuce,
theie's only one guy in the countiy iight now foi what you want to uo, anu I'm not inteiesteu.'"
0ne evening two months latei, the same executive calleu Raunei at home anu saiu, accoiuing to
Raunei, "'Biuce, I was thinking - I'm pietty inteiesteu.'"
uTCR built one of its thiee successful ueath-caie platfoims with that executive anu his team.

Aftei uTCR finus the iight man foi the iight inuustiy, one successful iounu-tiip ueal fiequently
leaves the fiim hungiy foi moie. uTCR, founueu in 198u, backs between foui anu six new CE0centiic
platfoims pei yeai. The fiim has on ioughly a uozen occasions backeu the same CE0 moie than once.
In seveial cases, uTCR has investeu with the same CE0 thiee times.
Foi example, uTCR has backeu one iehabilitation hospital entiepieneui, Rocco 0itenzio, in the
cieation of thiee sepaiate platfoims.
uTCR paitneieu on two sepaiate 'non-woven fabiics' businesses with Noith Caiolina-baseu }eiiy
Zuckei. The fiist company, calleu Polymei, was exiteu in 2uuu. The seconu, Polypoie, was exiteu
eailiei this yeai foi a whopping $1.1 billion. uTCR anu Zuckei hau cieateu Polypoie with an initial $1S
million equity contiibution.
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Anothei executive, electionic payments pioneei Bipin Shah, is cuiiently on his seconu ventuie with
uTCR - uenpass, an ATN-seivices platfoim. (uTCR seems to enjoy using similai company names with
the same executive on boaiu - Shah's pievious uTCR-backeu company was calleu uensai).
That uTCR has tiack iecoius with ceitain CE0s going back thiee poitfolio companies points to a
long histoiy. In fact, the fiim is one of the oluest piivate equity fiims in the 0S, although its stiategy
has, laigely unuei Raunei's uiiection, become iefineu, anu its owneiship stiuctuie has, laigely as a
iesult of Raunei's ambitions, bioaueneu.
uTCR began life in 198u as uoluei, Thoma, Ciessey, a spin-out gioup fiom Fiist Chicago leu by Stan
uoluei. At Fiist Chicago, uoluei hau leu an eaily investment in Feueial Expiess, among othei
impoitant investments.
uoluei, who uieu in 2uuu, was an impoitant mentoi foi Raunei. uoluei contacteu Raunei in the
late 197us while the latei was still a stuuent at Baivaiu's business school, as well as a pait-time
consultant foi Bain & Company, anu askeu if he was inteiesteu in becoming a ventuie capitalist. In
198S, Raunei became a paitnei anu the fiim auueu his name to the pioveibial shingle, along with Cail
Thoma anu Biian Ciessey.

In 1997, uoluei began to scale back his involvement with the fiim. Thoma anu Ciessey squaieu off
against Raunei anu many of the othei paitneis iegaiuing the size of the fiim's next funu. The oluei
paitneis favouieu a smallei funu, but Raunei wanteu to be moie aggiessive on size. A subsequent
schism cieateu two new Chicago piivate equity fiims - uTCR uoluei Raunei anu Thoma Ciessey Equity
Paitneis. Six months latei, Thoma Ciessey closeu a $4Su million funu, anu Raunei's fiim closeu an
$87u million funu. Both fiims aie heauquaiteieu in the Seais Towei.
uTCR uoluei Raunei iemains one of the few piivate equity fiims to have successfully tiansitioneu
to a next geneiation of paitneis, gianting that the bieak with Thoma anu Ciessey maue this easiei to
Raunei says his fiim is 'emphatic' about stiuctuiing itself to cieate the next, next geneiation of
paitneis. "0ui philosophy has been veiy much to shaie the owneiship anu the wealth," he says. "We
aie veiy much believeis in woiking out logical, long-teim tiansition plans so the fiim anu the fianchise
can have a life beyonu a couple of inuiviuuals."
Raunei notes that uTCR gives all piofessionals fiom vice piesiuents on up paitial owneiship of the
management company, a piece of the caiiy, anu the ability to coinvest in ueals.
What uTCR will look like as the junioi paitneis auvance has been a mattei of some uebate within
the fiim, Raunei says. The fiim uoes manage an affiliateu mezzanine uebt funu that invests exclusively
in uTCR contiol ueals, but beyonu that has not stampeu the uTCR bianu on any othei vehicles.
"We've gone aiounu anu aiounu the topic," says Raunei. "I'm not a believei that the uiveisifieu,
laige asset management fiims will be among the top peifoiming fiims, necessaiily, ovei the long-teim.
It's haiu to be the best uoing a lot of things - possible, but it's haiu to uo. I think in the enu we'll stay
focuseu in oui segment anu not have a ventuie oi smallei buyout funu."

A gieatei question, peihaps, foi uTCR is whethei anyone can uuplicate the unstoppable foice that
is Biuce Raunei. While all piofessionals within anu connecteu to uTCR aie highly incenteu to netwoik
with anu woo top executives, it is Raunei who leaus these chaim offensives at the highest level.
Raunei is on the ioau half the yeai, at times helping with funuiaising, but mostly builuing anu
maintaining ielationships with past, cuiient anu futuie poitfolio company manageis. Be is well
equippeu foi this job. Raunei peisonally comes off as veiy amiable anu ielaxeu. Although his scheuule
is an elusive puzzle of shifting pieces, he is easy-going with visitois uuiing the time allotteu. Raunei,
well ovei six feet tall, walks about his office with a miu-tempo gait anu appeais to inspiie, not feai, but
calm aumiiation among his paitneis anu employees.
But Raunei is iaiely not peifoiming some uuty on behalf of uTCR. A self-uesciibeu woikaholic, he
iises eaily anu stays late. Be employs thiee assistants to manage his scheuule anu ueal flow. 0uuly,
Raunei's office has no computei, anu he eschews the Blackbeiiy. Be claims this is because the Inteinet
is a time wastei anu filleu with 'extianeous infoimation.' Insteau, an assistant eithei piints out his e-
mails foi his ieview, oi, when he is tiaveling, ieaus them to him ovei the phone.
In fact, Raunei uoes much of his communicating anu fiim management via the phone. "I like to heai
the tone of a peison's voice," he says. Be gives anu ieceives ioughly 1uu voicemails pei uay, anu has
built a system by which he may leave messages foi scoies of his paitneis, employees anu contacts at
the same time.
Raunei has a busy social anu family life as well. Be is heavily involveu with a Chicago euucation
chaiity, anu he is maiiieu with, yes, six chiluien. Be is a 'iabiu' biiu huntei, anu a 'passionate' fly fishei
anu skiei. But to wonuei how he balances business against peisonal time is to misunueistanu Biuce
Raunei - he uiaws no line between the two. "If I'm uoing one of these things that I'm passionate about,
I'm almost always uoing it in the context of what woulu be consiueieu business," he says.
Executives who enu up on Raunei's woo-list shoulu know that just because they get inviteu to go,
say, hunting with him, that uoesn't mean that Raunei isn't also ueeply inteiesteu in them as fiienus.
But they shoulu also iemembei that just because Raunei is now theii best buuuy, it uoesn't mean he
isn't still iabiuly insistent on builuing a business with them.

"Theie's no uistinction in my uay between my woik anu my play," he says. "I'll get to know a CE0
on a veiy peisonal level. We'll play golf, go out to uinnei, have a cigai, go hunting, fishing. uet to know
theii family. We become fiienus, which is pait of the fun of the business."
Raunei's says peisonal ielationships with his business paitneis aie iewaiuing in anu of
themselves, but they often leau to piofitable business ventuies. "I finu that the peisonal bonuing that
comes fiom fun leaus to piopiietaiy ueal flow because the CE0s enjoy woiking with us. The executives
we back aie successful; they'ie wealthy; they've uone it. They want to woik with folks who aie fun to
be with. Life's too shoit to woik with folks that you'ie not going to enjoy."
Raunei's passion foi stiategic bonuing answeis the question, what woulu he uo if he weien't
iunning a piivate equity fiim. The answei: iun a piivate equity fiim. "I love the piocess of meeting
new people, getting to know theii visions anu helping them implement theii uieams. I woulu uo this
woik heie as a hobby. I'u uo it even if we weien't getting paiu a significant amount of money."