Sharewatch

As deputy finance editor of Property Week, one of Building’s sister magazines, I spent two years writing about a stream of management buyouts within the quoted property sector. Almost all

left a sour taste in the mouth of shareholders and analysts, who almost always felt the management had bought the company on the cheap.

A similar story has emerged at housebuilder Countryside Properties, where founder Alan Cherry and his sons Graham and Richard have launched an opportunistic management buyout, thought to be pitched at 265p-275p a share.

I say opportunistic because the Cherry family launched its bid four months after a profit warning sent shares in the housebuilder down 14%. By contrast, when the news of the buyout was announced to the stock exchange last week, Countryside’s price rose almost 40% to 269.5p.

All of which presents Countryside’s shareholders with a dilemma. Either accept the buyout offer and forever worry that you sold too cheaply or refuse it and send a disgruntled management team back to their desks.

The solution, I believe, is the one that was adopted at Chelsfield, the property company founded by Elliott Bernerd, one of property’s best-known dealmakers.

When Bernerd launched his buyout last year, analysts complained that his offer did not take into account profit to be made from developments in the pipeline.

However, most suspected the buyout was a done deal. The senior independent director, Sir Bruce MacPhail, was a very old friend of Bernerd’s. Yet instead of recommending the offer, MacPhail and the board said that his 305p a share offer did not reflect the full value of the company and threw the door open to other parties.

Although none emerged, Bernerd and his team were forced to increase their offer to 320p a share, and bought the company for £895.5m in January.

Similarly, Cherry’s takeover should not be considered a fait accompli. A proper sales process is required, one that leaves shareholders safe in the knowledge that the independent board has secured for them the best return on their investment possible.

Angela Monaghan Building’s business editor