GTCR, with $7 billion under management, just raised $3.25 billion to buy companies, your biggest fund ever. Given the financial misery of recent years, what advice, or words of warning, do you get from pension fund managers entrusting you with their cash?

Don’t get caught up in either the expansion or the depression/ recession mindset. Stick to your knitting.

Advice you’d give any investor?

Absolutely.

Most private equity firms buy mature companies and unwanted divisions of large corporations, managements intact. But you seem to go out and find management and then, together with them, go buy the companies.

We’re in two businesses: industry research and executive recruiting. We study industries, and we network like crazy to find the superstars. Today, we’re partners with two dozen CEOs. Some we’re backing for the second, third time. It can take from six months to nine years from the time we meet someone until we actually become partners with each other.

How do you find these people? An example?

The funeral home business. We’ve been in it three times.

That’s a terrible business! The rising cremation rate . . .

Years ago, I went to a funeral in Denver. Driving back to the airport, I saw a big lit-up billboard [for a] funeral home. It seemed inappropriate. Ten miles later, another billboard. [I thought,] Shit, it’s a chain. We’ve done well in multi-location businesses. We studied [the funeral home industry], learned it has many good characteristics. It’s poorly run, but the margins are good.

But sizing up the executive is nearly everything?

A lot of reference checking. Are they winners? How did they handle failure in their careers? We go to all the trade shows. We call it the leader strategy. Deal flow comes to them. Talented executives come to them.

I’m sure a lot of executives want to get your backing. Has your bullshit meter become more sensitive?

I hope so. We probably make connections with 1,000 executives a year. We back six a year.

Biggest winner financially ever at GTCR?

VeriFone. In any retail store, if you check out with a credit card, you use a VeriFone terminal. We bought a majority interest and helped restructure it. We turned $60 million into $860 million. That was a good one.

Biggest dry hole?

Zefer. Unfortunately, I was on the board. It was an e-commerce company during the first dot-com boom. We lost $88 million.

You’re 55 and have been at GTCR about 30 years, making enough money to endow several university chairs and build a dorm and a library at Dartmouth, your alma mater. What’s next?

I’ve been giving back with my money. I want to give back with my time. Rahm Emanuel is a close personal friend. We’re bouncing ideas around. I’m passionate about two things: public education and economic growth. I’m in transition mode.