The Pricing and Valuation of Public Assets: Experiences in the Uk and Hungary*

Abstract

IntmductionThe valuation of assets to be privatised is a crucial though problematical aspect of the privatisation process. It highlights conflicting objectives of privatisation policies since governments need to reassure the community that assets are being disposed of at a fair price yet in order that the policy be seen to succeed, it may be necessary to offer various inducements including a purchase price which is below that which may prevail in the absence of such constraints. This paper addresses issues concerning the valuation and pricing of assets to be transferred from the public to the private sector. It analyses the general influences on valuation for privatisation and the problems which relate specifically to post-communist Funding far this research from the European Community ACE Rogramme, (grant number 90/999/040/001/027) is grakfully ecknowledged. Financial support for the Centre for Management Buy-out Research from Barclays Development Capital Limited and Touche Rose Corporate Financeis also gratefully acknowledged. Thanks are also extended to Igor F'ilatotchev, Judit Karaai, two anonymous referees and the editors of this journal for helpful and constructive comments on an earlier version.

Finance and Control in Privatisation by Management Buy-Out

“…In the case of the bus industry, attempts to link privatisation and enhanced competition have proved difficult. Competition policy has been problematical with only four O F T investigations of predatory behaviour having been initiated and recommendations forceably to divest offending acquisitions have been frustrated by legal uncertainties about the applicability of merger policy criteria to local bus markets (Wright, et al, 1992). The Committee of Public Accounts (1991) has also commented that the Department of Transport, whilst having taken measures to promote competition at the time of the sale, did not subsequently regard themselves as responsible for judging the adequacy of competition but rather left it to competition policy.…”

The Financial Performance Of Privatised Firms: Evidence From Three Transition Economies

“…In addition it still not clear to what extent the government is continuing to provide subsidies to state-owned companies. "For numerous examples of corruption and cases where serious valuation problems arose during `spontaneous privatisation' see Lipton and Sachs (1990), Grosfeld and Hare (1991), and Valentiny et al (1992). " The only free distribution of shares was to the Social Security fund and local councils.…”

“…The following conjecture is tested: C: 3.9 Initial returns for PIPOs in regulated industries are higher than initial returns in competitive industries. Valentiny et al (1992) identify presentational, institutional, economic, and accounting factors as the variables that affect the valuation process regardless of techniques used.…”

“…It has been demonstrated in the literature that any clustering of PIPOs in particular months or years may have an effect on offer prices because of the need to reduce PIPO prices due to limited market capacity (Valentiny et al, 1992). Clustering may also have an important effect on subsequent performance and statistical results (Ibbotson 1975).…”

Privatisation processes and firm performance : the Libyan industrial sector

“…This is an activity that concerns valuing and pricing the firm"s assets (Valentiny, Buck, & Wright, 1992). To derive the market value of the firm, several valuation methods are considered as proxies for contestable market value (Davis, 2002).…”