Groupe PhysioExtra: Passing the torch and feeding the flame
PhysioExtra started out in 1997, and it wasn’t long before the small business began to expand. Pascal Gagnon was the first physiotherapist the startup hired in 1999—and later tasked to open a second clinic. Fast-forward 27 years from those early days, and Groupe PhysioExtra now has 45 clinics. Pascal never imagined he would run his own business, but today he’s the CEO of one of the largest networks of private rehabilitation clinics in Quebec. This is his story.
From physio to CEO
Pascal Gagnon didn’t set out to become a manager or business leader, but he soon learned the ropes. “At first, I had no idea what it was like to run a business, because I didn’t have any role models to look up to,” he says. “But I come from a competitive sport background, and the concept of striving to do better and leading teams to succeed was something that really resonated with me.”
When PhysioExtra founder Alain Racine asked him to open a new clinic, Pascal rose to the challenge and showed his natural flair for leadership. PhysioExtra soon went on to open a third clinic in Lachenaie, then a fourth in Terrebonne—and the business just snowballed from there. In just a few years, the PhysioExtra network expanded throughout the Greater Montreal area and across the province, largely driven by Pascal’s leadership and determination. It was one thing for him, a trained physiotherapist with on-the-job management experience, to shepherd the expansion of a flourishing business, but only time would tell if he was cut out to take the helm and step into the CEO’s shoes.
Transferring ownership to employees is an option that’s often overlooked by business owners preparing to pass the torch. Fewer than 1 in 5 succession plans set things up this way—but there are many reasons why it’s worth considering.
Governance: The key ingredient
When PhysioExtra’s founder decided to hand over the reins of his company, the group of internal shareholders headed by Pascal Gagnon seemed the ideal buyer. “The real benefit of an internal takeover is that you’re not starting from scratch. Especially when the people taking over have done just about every job in the company,” Pascal says. The share ownership structure of Groupe PhysioExtra turned out to be its biggest business succession challenge. “There were 12 of us shareholders in all,” Pascal explains. “And that potentially meant 12 different ways of seeing things.” In other words, it could have been a case of too many cooks in the kitchen—if the group hadn’t thought outside the box.
When Groupe PhysioExtra brought in a new CEO, it also made some sweeping changes to reform its governance. “Since each clinic had its own group of shareholders, we decided to make every share equal by creating an overall holding company. Then we brought external directors onto the board of directors, with Michel Clair as the chair. He’s an authority on health as well as being a seasoned administrator. We clearly defined everyone’s roles and responsibilities and formed committees to report to the board. And we conducted a strategic planning exercise.” These governance best practices empower directors to oversee day-to-day operations and guide the business forward.
“It was important to draw a line between shareholders and the board of directors, and to clearly define each person’s roles and responsibilities. That way, our business decisions would be more objective.”
Pascal Gagnon, Groupe PhysioExtra CEO
Building on an existing base
Another challenge for a business as decentralized as Groupe PhysioExtra is to keep the corporate culture alive. The network now spans the province and has some 600 employees. When he took the helm, Pascal Gagnon wanted to grow the business without losing sight of its values.
“It’s crucial for us to keep our teams in the loop about what we’re doing, and to make sure they know why we’re doing it.”
Pascal Gagnon, Groupe PhysioExtra CEO
“It’s all about enjoying what we do. We’re inspired by best practices in every field. We’re innovative and we want to lead the way. These are the fundamental values we’ve lived by since day one, back in 1997,” Pascal explains.
As CEO, he certainly enjoys what he does. “I still love physiotherapy. I still practise a few hours a week, and I do some teaching too.” Clearly, Pascal Gagnon hasn’t let becoming the CEO of a large company go to his head. Being a practising physiotherapist too keeps him grounded.
What's the best piece of advice you’ve been given on your entrepreneurial journey?
“I was fortunate to have an information interview with the businessman Alain Bouchard. He drilled into me how important it was for us to form a team of regional directors to train and support our clinic managers and be the points of contact with our administrative team. We also have a fantastic operations manager overseeing these middle management positions. Delegating the operational side of things has freed me up to focus on developing and growing the business.”
Desjardins tips
How to prepare for passing the torch to employees
Business owners who are thinking about retirement often struggle to find someone they want to take over from them. And yet the ideal candidate or candidates are sometimes right under their noses, according to Richard Quinn, Director of Business Transfers for Desjardins.
There are plenty of reasons why it can be a good idea for a business to pass the torch to someone in-house. They already know the ins and outs of the business’s operations and the market it serves. That can give the new owners a real head start and set them up for success.
“Things can get tricky, though. If a potential buyer is an employee, it’s not always easy for them to report to their boss during the workday, then sit at the negotiating table with them as an equal. Especially because business owners often have an emotional attachment to the ‘baby’ they’ve nurtured,” Richard Quinn says.
With this in mind, it can be helpful to bring an impartial third party to the table to steer the acquisition process, negotiate a fair price and set the stage with the best possible conditions going forward.
The pros and cons of a collective takeover
Sharing risks and responsibilities is often what motivates a group of buyers to join forces. However, Richard Quinn has a word of warning to share. “It’s important to make sure that everyone’s on the same page and shares a common vision, too. Everyone needs to agree on the shareholding structure.”
The cornerstones of the transaction should be a business transfer plan and a shareholders' agreement.
Flexibility and growth go hand in hand
Although financing the transaction is just one aspect of transferring a business, the structure of the financing package can be a decisive factor in the acquisition process. Desjardins’s teams work with business owners and potential buyers at this stage to propose customized strategies.
“Flexibility is key,” says Richard Quinn. “The financing needs to have some room for growth.” Because acquiring an existing business is a springboard for buyers who want to hone their own entrepreneurial vision and inject their own energy to take things to the next level.