Answering “A Better Pasona”: the activist and the founder who held on (2017)

The management that held the line, and the homework left behind

The heart of this episode was neither a financial crisis nor a scandal but a choice: how far a founder-led management, pressed on its low returns and its hidden value, would bend to an outside demand. Oasis’s diagnosis — lopsided investment, loose cost control, governance that had stopped functioning — struck precisely at the weaknesses of a Nambu-style management that had put expansion first. And still Pasona opened no room for dialogue and held on to its structure of listed subsidiaries intact. For a company bound together by its founder’s gravitational pull, admitting the logic of outside shareholders must have looked continuous with letting go of control itself. That the shareholder proposal came to nothing shows that, in the short run, the defence succeeded.

Yet the homework thrust upon it did not simply vanish. The question of how to release the subsidiaries’ hidden value to shareholders would, a few years later, be answered by Pasona’s own hand, in the shape of Benefit One’s sale to Dai-ichi Life. That a management which had rebuffed an activist’s demands went on, after an interval, to carry out part of those demands itself is a reminder that activism cannot be scored on an instant win or loss. How to reconcile the hidden value of a parent-subsidiary listing with founding-family control — the question Oasis threw down in 2017 would go on to govern Pasona’s capital policy for years.