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Paul Desmarais walks to the Power Corp. of Canada annual meeting.SHAUN BEST/Reuters

Paul Desmarais built one of Canada's biggest financial companies the old-fashioned way – by making friends with trusted business partners and political leaders, one handshake at a time.

The French-Canadian entrepreneur was as patient as he was cautious, and he left nothing to chance. Mr. Desmarais started planning his succession 20 years ago. In 1996, his sons Paul Desmarais Jr. and André Desmarais became co-CEOs of Power Corp. of Canada and co-chairmen of its main subsidiary, Power Financial Corp., in a split leadership structure that is rarely seen in the business world.

Yet until his death at 86 at his Charlevoix home on Tuesday night, Mr. Desmarais held on tightly to voting control of the company he built from his family's bus service in Sudbury, Ont. Mr. Desmarais leaves his shares – and corporate control – to his wife Jacqueline and their four children.

The bigger question is where he leaves Power Corp., a sprawling empire that had $527-billion in consolidated assets and assets under management at the end of 2012.

While Mr. Desmarais focused Power's wide-reaching activities on financial services – life insurance, mutual funds and asset management – the company's complex organizational chart looks like an electric panel.

Power Corp. controls two-thirds of Power Financial Corp., parent company to two of Canada's largest financial firms. Much of Power Financial's earnings comes through its 68.2-per-cent stake in insurance giant Great-West Lifeco Inc., which oversees Canada Life and London Life, as well as Boston-based asset manager Putnam Investments. Its other major business is IGM Financial Inc., a money manager with $126-billion in assets, primarily through Investors Group and Mackenzie Investments.

The unusual governance structure, which secures Desmarais family control over all of the major businesses, sets companies such as Great-West apart from their competitors, said Peter Routledge, an analyst at National Bank Financial. Under Mr. Desmarais's leadership, the company implemented an executive committee structure. The committee, made of former Power executives, meets monthly to approve the objectives of Great-West.

"Where that has made the biggest difference for shareholders is in the last stress test – the financial crisis," Mr. Routledge said. The committee didn't allow Great-West to underwrite a lot of risky insurance products, for example. "Because you had scrutiny every month … you had a lot of clear thinking," Mr. Routledge said.

Such prudence was a hallmark of Mr. Desmarais. When the recession hit in 1990, Power Corp. had almost no debt and a boasted a war chest that Bay Street envied. In the prior year, Mr. Desmarais had sold off one of Power Corp.'s core holdings Consolidated Bathurst for $2.6-billion and accepted BCE Inc.'s $547-million offer for Montreal Trust, a mid-sized institution he felt had become too small to rival Canada's big banks for depositors.

But Power strikes when opportunity arises. In the past decade, Great-West concluded two transformational deals. In 2003, it bought Canada Life for $4.2-billion, snatching it out of the hands of Manulife Financial Corp. This past July, the company bought Irish Life, Ireland's biggest life insurer, for $1.75-billion.

"Other insurers have gone after Asia as their growth vehicle," noted Robert Sedran, analyst at CIBC World Markets. "The market doesn't always know quite what to make of [Irish Life], because it's a bit of a unique platform."

Power Corp. already had an extensive presence in Europe. Mr. Desmarais partnered with Belgian businessman Albert Frère to launch Parjointco, a holding company that controls Pargesa Group. This Geneva-based company holds significant positions in a number of European multinationals, such as minerals processor Imerys, building materials giant Lafarge and energy firm Total SA, through the Groupe Bruxelles Lambert.

The pair did many deals in Europe together over the span of three decades. "They both wanted the partnership to outlast them and it will, as it is being extended to 2029 next year," said Gérald Frère, chairman of Groupe Bruxelles Lambert and son of Albert Frère, 87.

Power Corp. also secured influence. Power Corp. has access in China that most companies would envy. Mr. Desmarais first visited the country in the late Seventies and has since held close ties with a number of Chinese leaders he met or entertained. He is viewed as one of the Canadians who had the most guanxi, or the best connections, in the country.

Power has made most of its Chinese investments through Citic Pacific Ltd., a Hong Kong-listed holding that invests in mining, in manufacturing and in real estate in mainland China, Hong Kong and Australia. Power also became the first Canadian company to be allowed to invest directly in the country.

"Paul Desmarais understood the importance of China even before Chinese leaders were convinced that economic reform would lead to a better future," said Yuen Pau Woo, president and CEO of the Asia Pacific Foundation of Canada.

The track record is not perfect, however. In 2007, it acquired Putnam at the steep price of $4.6-billion. Putnam was struggling with poor fund performance at the time and it still isn't profitable. This will be Great West's biggest challenge.

IGM is also facing challenges of its own. It is the second-largest mutual fund manager in the country through the Mackenzie Financial and Investors Group brands, but that sector has become increasingly competitive as big banks seek to serve the money management needs of aging baby boomers.

Now, analysts expect subsequent acquisitions will be incremental rather than transformational.

With files from reporter Nathan VanderKlippe in Beijing.