| Headline: What it takes to privatize successfully Source: Euromoney Date: April 2001
The investor must also receive a guarantee of management control, whether or not it holds more than 50% of the shares. This has proved to be the only way to attract the managerial and technical expertise needed to transform loss-making state enterprises into efficient, competitive companies. Strategic investors are also able to make the capital commitment needed to modernize factories and equipment that are mostly many years out of date. “The only form of privatization that has clearly contributed to the post-privatization performance of enterprises is the sale of assets to strategic investors,” says the OECD. Central European governments have also concluded, after years of trial and error, that sales should be as rapid as possible, because governments are reluctant to accept the social cost of redundancies when the companies are state-owned. | |||||||||||||||||||||||||||||||||||||||||