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Cegerco president builds a strong succession plan

Don Wall
Cegerco president builds a strong succession plan
CEGERCO — Cegerco president Jeannot Harvey said his firm’s record of rigorous health and safety standards on difficult projects has earned it lots of civil work with Hydro-Quebec and beyond. Pictured, the recent Campbellford Dam 11 project on Ontario’s Trent-Severn Waterway.

The business world is notorious for poorly developed succession plans but in the case of Jeannot Harvey, president of Quebec-based ICI construction firm Cegerco, his firm’s transition to a new leadership team could not be going better.

Harvey, now 77, explained once it was determined between him and his daughter Eloise, a successful entrepreneur in her own right, that she did not want to take over the firm, he had three options. He could shut the firm down; he could sell it; or he could spearhead a plan to pass along ownership and management to senior executives of the firm.

The third option, which Harvey calls Cegerco 2.0, was eventually hammered together but with equity lacking within his management team, he brought in Desjardins Capital as a minority investor and to help execute the succession plan.

Now, after spending more than 45 years nurturing the firm as it carved out a reputation as multi-faceted project manager and in particular a reliable contractor on major power projects for Hydro-Quebec, Harvey says he is confident the firm is in good hands.

And there is an added bonus: his daughter has agreed to sit on the board of directors as chair, occupying one of two seats Desjardins Capital holds as a shareholder.

“I saw one board meeting about a month ago and I saw my daughter manage it and I said, ‘that was a good idea,’” Harvey said.

Cegerco employs 300 people at its Chicoutimi headquarters and its Montreal office and, under the guidance of Desjardins Capital, the goal is to pursue a growth plan to increase its annual revenue by 20 per cent.

Desjardins Capital COO Marie-Helene Nolet said while the firm is an investor, it’s very clear that management is still in the hands of Jeannot Harvey and the management team.

She said her company’s role is to bring money to the table, support the transition in ownership, assist in the execution of the growth plan and other strategic planning, advise on possible “course corrections” and provide other expertise such as ensuring governance stays on track during the transition.

“That’s part of our mission, to invest in regions in Quebec as well as make sure that enterprises have the means to grow and to transition from one owner to the other,” said Nolet.

Harvey said a major French construction firm was inquiring about buying Cegerco over five years ago but he was not ready to sell and besides, he has misgivings about possibly uprooting the firm from its Saguenay roots. In recent years, with investment slow in the firm’s home territory, Harvey worked to expand its operations to Montreal but he is intent to keep it rooted in Saguenay.

“I thought we should go not too fast,” he said about the French offer. “I was following how my people were feeling about having some French construction company, a billionaire, coming into Quebec and losing the Quebec identity.

“It’s very important that the people are very, very tight in Saguenay and their region.”

Harvey has run a half dozen businesses including real estate, engineering and mechanical firms and says his style is to ensure he has strong VPs who can run the operation.

“The way I raised my top VPs is to make them responsible very early in the process,” he said. “I see how things are going, I’m looking at the profit and losses, there’s no losses, so we’re making money. Everybody should be happy.”

The succession plan has been five years in the making. It’s important, Harvey and Nolet said, to not leave the process to the last minute.

“In the last four or five years all my VPs were going very well,” said Harvey.

Last May he and his senior managers decided they were ready to take bids for ownership shares and after five months of due diligence it was decided Desjardins Capital was the best fit.

“They’re big but they are also very concerned with what is going on in the region,” said Harvey.

Harvey said it may be three years before he completely hands over the reins to the designated successor, general director Jean-François Coude.

Nolet, meanwhile, said Desjardins Capital is content to make a profit on its investment over the coming period of transition and there is no strict timetable for the firm to sell its shares to other members of the ownership and relinquish its guidance role.

“We’re not there to flip it early,” said Nolet. “We’re there as a partner to ensure this transition.”

Follow the author on Twitter @DonWall_DCN.

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