Paul Desmarais III: ‘Get training outside of your family business’

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Paul Desmarais III is of the third generation of the Montreal-based Desmarais family that built Power Corp. into one of Canada’s most successful businesses.

Built by Paul Desmarais Sr. in 1951 when he bought a struggling Sudbury bus business, the company became a holding company with stakes in railways, utilities, pulp and paper and insurance.

The second generation, Paul Desmarais Jr. and André Desmarais, moved the business in 2019 into a diversified management and holding company with global interests that include financial services, asset management and sustainable and renewable energy.

Educated at Harvard College and with an MBA from INSEAD in France, Paul Desmarais III worked at Goldman Sachs in investment banking and special situations and had roles at Quebec-based minerals company Imerys in supply chain management and Great-West Lifeco in risk management. He is now the chairman and chief executive at Power Corp.’s alternative asset manager Sagard Holdings Inc., senior vice-president at Power Corp., and holds board roles at a number of firms, including chairman at online investment firm Wealthsimple and board member at Grayhawk wealth management and advisory firm for family businesses.

Here, he discusses his business trajectory and offers advice to next generations of business people and business families, along with Grayhawk founder Michael Kaumeyer.

Why is Sagard Holdings important to you? 

Paul Desmarais III: Sagard was founded in 2003 by my father as a series of independent funds in France, the United States and China. A generational leadership transition began in 2016 during which Sagard went through a transformation. We developed the vision to build a global alternative investment management industry leader.

To do so, we leveraged our family legacy in Power Corporation’s core geographic markets and our deep understanding of financial services. We brought the teams together and, over the next five years, launched focused funds in private equity (with middle-market funds in Canada and Europe), credit (Sagard Credit Partners), Fintech venture (Portage Ventures and our ecosystem partner, Diagram Ventures), pharmaceutical royalties (Sagard Healthcare Partners), real estate (Everwest) and crypto (Outremont Technologies).

Through this transformation, we grew from a small base to more than US$14 billion under management and with professionals in Canada, the United States and Europe. We also expanded into wealth management with our controlling stake in Grayhawk, our advisory business for successful Canadian families.

Building Sagard is a motivating entrepreneurial pursuit for our team. I believe we are making a real contribution to the sectors in which we operate through our capital, culture and network. It is essential to me that we continue to build our differentiated culture – one of collaboration and entrepreneurship above all, which attracts exceptionally talented but humble people. I am also driven by the idea of creating networks that fuel virtuous cycles. One of the most satisfying outcomes of this dynamic is the job creation and growth of innovative companies we have been able to facilitate.

How is Grayhawk, a Canadian business family wealth-management firm, different from your other investments?

PD: Michael Kaumeyer is the founder of Grayhawk and co-CEO. Today he is joined by co-CEO Peter Mann. Their vision for Grayhawk is anchored in valuing relationships and providing the best complement to families’ portfolios based on their priorities and values. Entrepreneurial families are sometimes underserved in Canada, given the integrated legacy between advisor and manufacturer in the wealth industry. Grayhawk brings them into our growing network, provides them with relevant content and advice, but most importantly, gets them exposure to the best money managers in the world on a tailored basis through independent pools, which the investment office manages. They can only do this well by developing deep client relationships and adopting a holistic advisory approach.

Michael Kaumeyer: I founded Grayhawk after observing successful Canadian families and their difficulties accessing an independent, globally diversified portfolio of the world’s best third-party strategies. Delivering this to families, with an emphasis on forging deep and enduring relationships with all family members, is at the core of our work and has resonated in the market.

How did the choices you and your family made about your education evolve and how did your education affect your business trajectory?

PD: One of our most important family values is hard work. That begins with schooling. My brothers and I considered our education a tool to enable us to become entrepreneurs someday. Studying and working abroad (in the United States and in France, in my case) was quite valuable in building new networks. Education begins at school but continues into early career experiences. Today, the relationships that I was able to build at Harvard and Goldman Sachs contribute to the success of our firm on a daily basis.

What supports and training other than your formal education did you find valuable in leading you to your business milestones?

PD: I often say that the true value of an entrepreneur is the ability to attract talented people. I am not a one-man show, and my partners are building the vision alongside me.
Adam Felesky, who co-founded Portage Ventures with me, is a fearless builder. François Lafortune [co-founder of Diagram] is a brilliant entrepreneur. There are many others who have helped us make Sagard what it is today. People like Adam Vigna, CIO, who runs our credit business, who joined us from a senior role at CPPIB and gave us early credibility to raise outside capital; Samuel Robinson, our president who is scaling the business operations; and Marie-Claude Boisvert, one of the most respected women in the Canadian private equity space who leads Sagard Private Equity Canada.

Each of my own professional experiences also was valuable. The time I spent at Goldman Sachs taught me excellence and rigor, in addition to investing and finance skills I rely on to this day. It is also where I met my partners and friends, Adam Vigna, Samuel Robinson, and Mustafa Humayun [partner at Sagard]. My time at Imerys taught me about the need for strategic vision in business and the power of building an entrepreneurial culture through decentralized decision-making. I gained a deep understanding of the insurance space during my years at Canada Life.

Can you offer advice to next generations of Canadian business families on how they can nurture their ambitions and hone their own strengths into a successful future?

MK: Our work with members of the next or rising generations always starts with a discussion of values. Values are the wiring that allows the generations to connect and communicate in a way that brings understanding and alignment – a key to successful generational transfer. In terms of advice, I would say: stay focused, do what you love, and surround yourself with great people. When one is passionate about their work, the rest takes care of itself. Those who strive to be the best at something they love and stay focused have a great advantage.

PD: The best advice I can give to future generations of business leaders is to get training outside of your family business. This will set you up for success as you will receive honest feedback, develop new networks, and bring new ideas to your business.

You are an avid supporter of the arts, particularly traditional and contemporary Inuit art. How did you come to chair the Kenojuak Cultural Centre capital campaign and what philanthropic advice do you have for young people?

PD: I began collecting Inuit Art in the early 2000s. I was given the advice to find a niche in the art world where I could focus. The works are beautiful, depict the Canada that I love, and were affordable. As an important collector of this art, I felt it was important to give back to a community that has given me so much joy. When Andy Pringle and Pat Feheley asked me to chair the campaign, , a partnership between the Hamlet of Cape Dorset, Nunavut and West Baffin Eskimo Cooperative, I felt a responsibility to do so.

Just like in business, the key is to embrace what you are passionate about and pursue interests with energy and enthusiasm. I was once told, “Focus on what you can impact, and your impact will grow.” I have always loved art, so that’s where I put a lot of my time. Young businesspeople should get involved in areas in which they have particular expertise or insight, that bring them great satisfaction, and where they can add value.

Responses have been lightly edited for clarity and length.