Some corporate decisions leave you wondering what the board might have been thinking at the time. That seems to be the case with the board of Venoco, a California oil company that is the subject of a proposed $770 million management buyout.
On Jan. 16, the Venoco board of directors agreed to let the company be acquired by its chairman and chief executive, Timothy Marquez, for $12.50 a share. The deal came after Mr. Marquez, the owner of 50.32 percent of the company, and the board had announced that he had made a bid in August 2011 at the same price.
Management buyouts are fraught with peril, and the reasons are fairly obvious. Management not only has superior information about the business, but studies have also found that managers can time a bid opportunistically to pay a lower price.