The future of 30-year-old Clayton, Dubilier & Rice? Try Novak, Sleeper and Schnall. A troika of thirtysomethings takes the lead at an iconic private-equity firm.

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In 2003, over nearly the entire year, David Novak and Nate Sleeper, both partners at private-equity stalwart Clayton, Dubilier & Rice, took apart Dutch electrical-supply company Hagemeyer piece by piece. The pair of PE investors pored over the turnaround target -- crunching numbers, checking channels, looking for upside while identifying trouble spots.

Hagemeyer ultimately decided not to sell. It was a bitter pill to swallow. The two CD&R comrades might easily have walked away regarding the experience as nothing more than a colossal waste of time. But they didn't come away empty-handed: They extracted some value from their tireless ­project by persuading Hagemeyer's biggest competitor, Rexel, to sell itself to CD&R.

That Novak and Sleeper were able to salvage a full year's work owed largely to a pact they had made two years earlier with their colleague Rich Schnall. Like-minded friends, the three young ­dealmakers had vowed to transform CD&R -- which over the years has invested $9 billion worth of capital in 42 companies around the world -- into an even bigger private-equity player, one willing to take on complex deals with many moving parts. Such a strategy, they knew, ran counter to the 30-year-old firm's proclivity to confine its portfolio holdings to more straightforward, by-the-numbers slam dunks.

At the time, all three had been at CD&R for only a few years. Sleeper was just 27; Schnall and Novak were both 32. Hoping to make themselves a vital part of CD&R’s future, they sat down together one summer afternoon to plot their course. A changing of the guard -- one that would ultimately be welcomed by the established firm whose culture they were aiming to reshape -- was underway.

Donald Gogel is CEO and senior partner at CD&R. Over the years, the 58-year-old has witnessed plenty of significant leadership chan­ges at his firm. The "C" in CD&R, Gene Clayton, had long ago sold his stake and left; Martin Dubilier, formerly of ITT, passed away in 1991. Joe Rice, formerly an attorney at Sullivan & Cromwell, has faded into symbolic-chairman status.

CD&R's youth movement began when Novak, Sleeper and Schnall, by equal measures creative and ambitious, resolved, along with other partners, to widen the investment parameters of its portfolio and take on more multifaceted businesses, often with multiple sectors and segments.

Gogel admits that some kind of shake-up was overdue: "We needed some new energy," he says. "New fields, new opportunities."

"When you look back at some of the transactions in the late 1990s, it's fair to say there was no one who was particularly happy with the deals this firm had done," Schnall says, referring to some troubled investments made between 1998 and 2000 -- notably in Fairchild Dornier, a regional jet manufacturer, and Acterna, a communications testing business -- in which CD&R lost its initial investments, representing what Schnall calls "significant" equity capital.

Founded in 1978, CD&R, among the oldest PE firms in existence, has a long history of landmark deals, including the $1.6 billion Gogel-led acquisition of Lexmark from IBM in 1991. But Gogel could see how the private-equity industry was changing, and he had a palpable sense of the growing pains his company was enduring as its young bucks locked horns with their older cohorts. "Painful," in fact, hardly begins to describe what it was like for Novak to approach Gogel and his colleagues with the news that the Hagemeyer acquisition, on which he and Sleeper had spent a year, had fallen through.

For three young, driven up-and-comers attempting to remake CD&R, Hagemeyer represented a perfect example of where they wanted to take the business. They were determined to find a way to save face.

Novak, Sleeper and Schnall, Harvard MBAs all, had thus far navigated their careers deftly, encountering little adversity while making their names at prestigious firms. Novak, who attended Amherst College as an undergrad, had worked as a banker at Morgan Stanley and at the Central European Development Corporation. Sleeper (who attended Williams College) had done stints at Goldman and Tiger; Schnall (a Wharton graduate) was a banker at DLJ.

Failure simply wasn't in their vocabulary. Novak approached Rexel's shareholders with an offer, based on the work they had done on Hagemeyer. The offer, they said, was better than anything the French company could expect to get in the public market: 10 times the company's 2003 operating profit, and at 6.7 times EBITDA based on the next year's estimates.

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