Madison lent money to commercial lender CapitalSource, which initially did well, before losing 40% of its value last year.
2008 Rank: 13
2007 Rank: Not previously ranked
Recent buyout fundraising: $10 billion
Named for the street corner in Chicago where it has its headquarters, the biggest buyout firm between the coasts considers itself a collection of seven specialist shops. The busiest niche has been the least sexy: paper products. Madison has carved pulp mills out of Procter & Gamble, sold a timber forest for five times what it paid for it, and built Europe's biggest packaging company.
Headwind issue: Madison Dearborn has started acting like a bank, lending capital to new companies, which increases both reward and risk on each deal. One company it did that for during the last downturn in 2002, commercial lender CapitalSource, initially did very well but has lost 40% of its value in the past year.
Worth noting: Chairman John Canning Jr., who stepped down last year to become chairman of the Chicago Fed, has invested in several art films, including Romance & Cigarettes, directed by John Turturro.
NEXT: Hellman & Friedman
Source: Rankings are based on a firm's most recently raised buyout fund(s). Fortune looked at data from Capital IQ, institutional investors, and the companies themselves to determine the size of the most recently raised buyout funds. For some firms that means a fund that was raised in 2007; for others it might be 2006. Whatever the date, the most recent fund was the one we counted. In the case of companies that raise multiple funds simultaneously as opposed to raising a single fund at a time, we chose to count only those private equity funds that were not raised in public markets and that were earmarked for buyouts (as opposed to investments in debt, venture capital, or other ventures).