How can loss making enterprises be sold?
It is unlikely that the disinvestment route, with no change in the management team, would work for these companies because there would be few investors wanting to buy a share in a company that makes losses. For these 98 companies, the government must engage in strategic sales. This would bring in a new management team which believes that it can put the assets of the company to productive use. However, it may be difficult to privatise these loss making companies even through the strategic sales route. In a privatisation auction, the government should permit negative bids: a bid where government pays someone to take the company off its hands. Negative bids were an important part of the massive privatisation which took place in Germany, after the end of socialism, and helped to rapidly get productive assets into the hands of efficient managers. Paying a management team to take over a PSU makes sense not merely because the government will not be paying the company year after year to cover
Related Questions
- During 2010, I sold fund shares inherited from my parents. Will cost basis and gain/loss information from this sale be shown on my 2010 Average Cost Accounting Statement?
- Timeshare purchased years ago, sold at a considerable loss. Can the loss be used to offset capital gains for CGT purposes?
- How can loss making enterprises be sold?
