December 12 2007: 2:48 PM EST

Veteran dealmaker

Buyout king (and former Navy man) Jerome Kohlberg gives GIs an assist.

By Telis Demos, writer-reporter

(Fortune Magazine) -- Thirty years before Jerome Kohlberg started a little buyout shop with Bear Stearns protégés Henry Kravis and George Roberts, he was a U.S. Navy officer returning from World War II. Thanks to the GI Bill, he went to Swarthmore College and Harvard Business School for free.

Today he's concerned benefit cutbacks are preventing many veterans from taking that same path - so he's started a $4 million fund for veterans' scholarships. Kohlberg, 81, who retired from the private equity business in 1994, will run the charity from his home in upstate New York, where he also tends to a small organic farm.

"The need for an investment in education is greater than ever," he says. And the future of the buyout business given the shaky credit climate? "I think we're learning lessons, and you can't do things you used to do," he says. "But there's an absolute need for it, legitimately and carefully done."  To top of page