What is the guarantee that the private sector would not quietly strip the company of its assets and then quit, leaving a worse mess for the government to handle?
First, government only considers bids from reputable bidders with plenty of experience in the appropriate sector. A big company with a long track-record of expertise in, say, foodstuffs or metallurgy is unlikely to descend to asset-stripping. Secondly, a company is almost always worth much more than its assets alone. Its position in the market, its customer base, its reputation for quality, the competency of its workforce and many other matters add to its overall value far beyond the cost of the machinery or the land on which it sits. So buyers often pay more than the asset value of the PSE being divested. In that case, a buyer would be crazy to asset-strip a company for which he paid more than the assets were worth. Nobody wants to kill the goose laying golden eggs.
Related Questions
- Is accommodation that is provided by a private company with care provided by a different body (whether public, private or voluntary sector) within the scope of the LHA scheme?
- What is the guarantee that the private sector would not quietly strip the company of its assets and then quit, leaving a worse mess for the government to handle?
- Can the EC legally demand that a private company sell its assets?
