Key Stages of Privatisation

2. Pre-sale Considerations

d) Establishing a timetable

It is good practice to establish a clear timetable for the privatisation as one of its earliest steps, and afterwards to stick to it as closely as is possible. It is also important that the key deadlines of the sale process are made public in order to ensure fairness between bidders.

It is generally accepted as good practice to carry out certain stages of a sale as quickly as possible so as to avoid losses to the enterprise which might result from uncertainty about its future viability, to maintain competitive tension amongst the bidders, and also to focus minds on securing a good deal, as all involved are likely to remain interested if the process is moving reasonably quickly, but may begin to lose interest in an excessively long and drawn-out process.

Sometimes the objectives of privatisation may include the desire to embrace a market economy, or to provide money to finance public expenditure or reduce national debt.

Many privatisations in various countries have been carried through by their respective vendors at great speed, which has on occasion meant that certain key stages of the process (for instance, selection of external advisors, putting the business into an appropriate legal form, ensuring that laws were in place to ensure its fair sale, decisions on the sale method, preparation of financial information, identifying and valuing the assets, valuing the enterprise, marketing and negotiating the sale, and applying appropriate safeguards and regulations) were omitted, or were carelessly or incompletely done. Thus at times speed of sale has been achieved at the expense of a thorough, professional process and, in retrospect, at the expense of other sale objectives, to the cost of the vendor and to the country as a whole.

Vendors should therefore make efforts to ensure that speed is not achieved by sacrificing a respectable and open process, or the other objectives of the privatisation.

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