Business Opinion: Joe Moran tells a good story. Perhaps a bit too good. When the IWP chief executive starts the "I am just a simple Kerryman at heart" stuff he could sell you almost anything.

He was at it again last week. Having blocked a 44 cent per share takeover offer from the management of IWP, he was turning on the charm - big time.

Quite understandably he was under a bit of pressure. The offer put together by deputy chief executive and finance director Bernard Byrne was not very appetising, but it was the only one on the table. It offered an exit for shareholders, who are now looking at selling into the market at Friday's closing price of 33 cents.

Mr Moran is adamant that the personal care and cosmetics group is worth more than the 44 cents on offer, despite a string of bad news which has helped push the share price down from over €2 last year.

He points to the performance of peers, such as McBride in the UK, as proof of the group's potential.

He argues that the share price is artificially low because of continued selling by fund manager M&G which held 10 per cent of the group at the start of the year.

But he also knows it will take more than a few good lines and his considerable charm to convince shareholders that he is right and that they are better off holding out for either a higher offer or a recovery in the share price.

This week should see a step in this direction with confirmation that Jim Murphy is to take over as chief executive, with the 67 year old Mr Moran stepping up to the chairman's role.

The logic behind appointing the former Golden Vale chief executive is simple and thus attractive. Both IWP and Golden Vale (now part of Kerry Group) are in the business of supplying products to retailers.

On balance the case put forward by Mr Moran for rejecting the MBO offer is reasonable, but many shareholders must still be wondering whether or not he was blinded by both the scale of the losses he would incur if he sold out at that price, and an emotional attachment to a business he spent 20 years building up.

Mr Moran has bought a large amount of stock in IWP over the last few years, taking his stake from around 4 per cent in 1998 to its current 16 per cent. Presumably most, if not all of these additional shares cost more than 44 cents each. His losses, if crystalised, would run into millions.

When questioned on this point, Mr Moran goes into charm overdrive, pointing out that Kerry people are not known for letting their egos get between them and a few pounds etc.

He is also quick to demonstrate that when he thinks the price is right, he is only too happy to sell a business. Sentimentality was not an issue in 1978, when he sold Buckleys, the builders' providers he had spent 14 years building up.

Whatever Mr Moran's motivation for blocking the MBO at IWP, small shareholders should be grateful because they are always the losers in such deals.

Over the last couple of years we have seen a raft of management buyouts and public to private transactions on the Irish market.

Companies ranging from Eircom to Riverdeep have been taken private and to a greater or lesser extent it was the small shareholder that lost out.

It stands to reason that the management of a company would not buy the business off its shareholders if they did not think that they would make money out of the transaction. There are lots of ways they can do this, but the simplest one is if you can buy the company for less than it is really worth, through an opportunistic bid.

The corollary of the management and their backers making money is that the exiting shareholders have to forgo the chance to make money, if not actually accept a loss.

Small shareholders are not very keen to do this and hence are rarely enthusiastic about MBOs. Their views are usually irrelevant, as the large investors - usually institutions - call the shots.

Fund managers and other large shareholders will exit stocks and accept losses if they believe they can do better by moving the remaining money into another more lucrative investment (usually in time for next year's bonus calculations).

What is different at IWP is that one very large shareholder, Mr Moran, does not seem prepared to accept his losses and move on.

As a consequence his interests are allied to the small shareholders in so far as he wants to see the company turned around and the share price recover for the benefit of existing investors.

At what point Mr Moran's interests will diverge from the small shareholders' depends on what happens next. The only certainty is that they will, and the most likely pressure point is a 50 cents a share level at which Mr Moran appears to have signalled that he would sell. In the meantime it would be churlish not to wish him well.