Ramped out of sight in the early 1990s, Betterware shares soared to ludicrous heights before collapsed amidst a welter of profit warnings. This was not before Andrew Cohen, the founder, had sold a chunk of his stake for pounds 33m at what proved to be the very top of the market. Those shareholders who interpreted this as the classic sell signal for all would have done well out of the company. The rest have not been so lucky.
There is always a whiff of controversy when managers take public companies private. They know the business better than anyone and what is a good price for them is obviously the reverse for everyone else. Furthermore, managements rarely buy out a company without the intention of enriching themselves by eventually taking it public again or selling it on at a profit. In normal circumstances, shareholders would be well advised to give the Betterware management the old two fingers. If managers are not prepared to work as hard on behalf of shareholders as they are on behalf of themselves, they should be fired and new executives brought in who are.
Unfortunately, Mr Cohen is not going to give them that chance, for he has decided to back the management bid with his remaining 47 per cent stake. Mr Cohen is a wise old bird and he may know more than the rest of us, but from the outside it looks like a final kick in the teeth for outside shareholders. Even if they had wanted to, they won't be able to turn this offer down.