The role of strategic value analysis in European privatisation decisions

European Management Journal Vol. 12, No. 2, pp. 189-l%, 1994 Elsevier Science Ltd

0263-2373(94)E0010-4 Printed 1x1 Great Britain 02632373194 $7.00+0.00

The Role of Strategic Value Analysis in European Privatisation Decisions ROGER MILLS, Professor of Accounting and Finance, Henley Management College, UK. SYAMAL GHOSH, Professor, Indian Institute of Management, Calcutta

The privatisation of state-owned commercial assets is an unstoppable global trend, with particularly strong momentum in Western and Eastern Europe. The challenge is to be able to measure the value of the benefits arising as a result of privatisation. Roger Mills and Syamal Ghosh offer a method of valuation - Shareholder Value Analysis (SVA) - which is more appropriate and consistent with the private shareholder’s perspective than conventional techniques. A numerical illustration is provided and the advantages of the SVA model set out.

Introduction

’ . . . a fransfer of assefs from the state to the private sector, accompanied by a radical reallocation of available productive resources, restructuring of the existing insfifufional setting in which production fakes place, and the introduction of new methods of corporafe governance, freed from the most noxious kinds of political interference’.

However, it is important to reahse that privatisation may take many different forms, a point we will develop later. For example, in the UK outright sale of government assets is a common approach to privatisation, whilst contracting for services appears to be the approach pursued by several other Western nations.2

In recent years, governments all over the world seem to have come to the realisation that unbridled state intervention in business and industry may be counter- productive and unnecessary. This has resulted in large- scale privatisation efforts the world over.

In Europe, privatisation seems to have acquired an unstoppable momentum. Any notion that the state should own or operate commercial assets has lost its political force. Whilst in some cases governments have been driven to privatise by the need to reduce their ballooning deficits, others have been motivated by another powerful and deep seated argument, that of commercial logic.

Impetus for Privatisation Much of the initial impetus for privatisation programmes came from the UK and USA. By the end of the 197Os, a sweeping privatisation programme was under way in the UK, and in the early 198Os, a new administration in the USA was pushing a broad deregulatory agenda. Privatisation programmes followed world-wide shortly afterwards and there has been a noteworthy increase in privatisation in recent years. For example, according to one source total privatisation proceeds have increased from $2.5 billion in 1988 to $23.2 billion in 1992.3 This increase has been mainly in developing countries and does not include privatisations in the former East Germany. When such privatisations are also included,

In a growing number of sectors, from cars to telecom- the figures increased to $69 billion, making the running munications, there have been competitive pressures on total since 1985 $328 biIIion.4 Looking to the future, companies to form cross-border alliances. Furthermore, European privatisations in the next five years will be the private sector has become reluctant to get involved worth more than an estimated $100 billion, concentrated with state-owned companies. In fact, for many primarily in France, Italy, Spain and the UK. What is European state-owned giants, privatisation has become more, issues in the Telecommunications sector should a condition for staying in the game. make up 15-25 per cent of the total.5

But, what is meant by privatisation? Frydman and Rapacznski’ provide a useful definition as a starting

Privatisation efforts are being made by some at the behest of the International Monetary Fund and the

point: World Bank. Other initiatives, follow a conviction that

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STRATEGIC VALUE ANALYSIS IN EUROPEAN PRIVATISATION DECISIONS

a lean and efficient government, purporting to follow prudent monetary and fiscal policies and offering greater scope for operation of market forces is preferable to a government that throttles private initiative. The move toward privatisation has definitely been accentuated by the liberalisation and globalisation of national economies, and has undoubtedly gained further impetus from the collapse of the command model in the former East-Bloc countries and their keen interest in introducing reforms.6

The Drive to Privatise in Western Europe Most of the biggest privatisations in the immediate future are expected to be in France and Italy, both of which we review in more detail shortly, but there is hardly a country in Europe that does not have plans for at least one issue. To understand the magnitude of these programmes, if all proposed plans are implemented, then a figure of $150 billion of issues is possible over the next four to five years. This compares with the UK programme which has raised over f40 billion ($60 billion).

I There is hardly a country in Europe which does not have plans for at least one privatisation issue

As regards France, in June 1993 the prime minister, Edouard Balladur, pushed through a bill to privatise 21 of France’s big state firms. The state’s holdings are predominantly within banking and insurance including Banque Nationale de Paris (BNP), Credit Lyonnais, AGF, GAN and UAP. In the industrial sector the state’s major remaining holdings are in Rhone-Poulenc, a chemical firm; Renault, a car maker; Air France; and Elf Aquitaine, a very large oil firm. The expectation is to raise approximately $40 billion by the end of the programmes. Selling the 51 per cent stake in Elf is expected to raise FFr35bn ($6 billion),7 making it one of the most significant deals ever and France Telecom a likely candidate in due course may be worth $22 billion. The government committed itself to an extensive privatisation programme via a somewhat unconven- tional approach in that it raised almost $19 billion during 1993 by selling the ‘Balladur privatisation bond’ to 1.3m domestic investors. The bond is to be repaid out of future privatisation proceeds.

It is important to realise that new privatisations are guided as much by fiscal imperatives as by ideology. In fact, empty treasuries have inspired most of Western Europe’s planned privatisations. Privatisation is seen as a means to curb a public sector deficit very often swollen by recession. Support often also comes from state firms themselves. Tighter budgets and lack of access to foreign capital have curbed investment, for which privatisation is considered to be an appropriate remedy.

In Italy, the upheaval that followed revelations of corruption in government added to the pressure for

change. As regards the sectors up for sale, the banking sector is also predominant, including Creditano Italian0 and BCI. However, Italy also has a large number of companies lined up for sale including Agip, a big oil firm; STET, the telecom monopoly; and assorted energy, engineering and insurance companies. They could raise $10-15 billion of which a large part is intended to be financed outside the equity market through strategic sales to corporate buyers, both domestic and foreign.

Of all European privatisation programmes, the Italian one has most potential to be affected by politics and continuing political turmoil may easily upset intended plans, particularly when it is noted that many earlier schemes went nowhere.

Outside France and Italy, Spain’s government may raise up to $8 billion from stakes in firms such as Argentaria, a bank; Repsol, an oil company; and Endesa and Telefonica, the electricity and telecom utilities. It has the advantage of holding many currently quoted cor- porations, which are ready for privatisation without the need for major restructuring.

In the Nordic countries, Sweden’s sell-offs including a stake in Procordia, a drugs firm - could easily net $10 billion over five years and Finland may raise $5 billion or so. Elsewhere, Austria, Belgium, Ireland, Greece, Portugal and Turkey all have programmes that may each raise between $500m and $3 billion.

Britain was the pioneer of privatisation and since 1980 sales have raised $60 billion. Little of great value remains to be sold. The government holds stakes in National Power and Powergen (the already privatised electricity generators), worth around $4 billion. The Post Office could possibly fetch a decent price, British Coal and British Rail are the only other big state firms, neither of which is reckoned to be a great money-spinner.

By stark contrast, there is great potential in Germany. The remaining stake in Lufthansa and Deutsche Telekom are both likely longer term targets. In fact, Deutsche Telekom is a prime privatisation target which is reckoned to be worth $20 billion (at least) and would be one of the largest initial public offers (IPOs) ever seen. However, this sale is unlikely to happen until at least 1996. A law moving slowly through parliament would allow some shares to be sold from then on.

As regards the former East Germany, most state firms have been ‘sold’ (often by paying investors to take them on); those that remain have little privatisation potential.

Privatisation Initiatives in Eastern Europe Though they are raising little money, the world’s most extensive privatisation programmes are taking place in the former communist economies.

In Poland privatisation is still in its infancy. In fact, weak

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STRATEGIC VALUE ANALYSIS IN EUROPEAN I’RIVATISATION DECISIONS

governments have been unable to dispose of more than a handful of big firms, however, roughly 50,000 small private firms are nevertheless producing around half of the country’s GDP. Only the Czech Republic has so far shed much of its state-owned heavy industry.

Many countries hope to follow the Czech lead by copying its method of mass privatisation. Czech citizens used vouchers to bid for shares in state firms, or in investment funds that would in turn buy company shares. Investment funds played an important part, though they have not gone uncriticised mainly because of an underestimation of their significance and laxity in their regulation in early stages.* Such criticisms were by all accounts noted by the Polish Government in its launch of its voucher scheme which was later than the Czech experiment. It has created holding companies to act as financial intermediaries which are intended to have an active role in the management of the enterprise in which they have a stake (limited usually to 30 per cent of the equity in each concern). Each Polish citizen receives a share in a holding company and, after an allotted period, the shares are tradeable either between holding companies, or for shares in individual firms.

After a long period of focusing upon details, the Russian Government opted for a voucher privatisation system which combines some elements of the Polish and Czech systems. All citizens have received vouchers worth 10,000 roubles, which they can either invest directly in firms or sell. In part to stem ‘spontaneous privatisation’, in which managers were taking over state firms without government approval, managers and employees have been given preferential targets over some equity in their firms.

Most ex-communist privatisations have tried to spread ownership widely within their own populations, keeping foreign ownership to a minimum. Hungary, which began privatising long before it officially shed communism, is the exception. It wants to raise foreign ownership, now approximately 4 per cent to 30 per cent by 1995, but progress is slow.

Why Privatise? We have identified empty treasuries as being one force driving privatisation initiatives, but it is also important to recognise that it is often seen as the best means to enforce market discipline and promote an efficient allo- cation and use of resources. However, just privatising enterprises is not enough. Restructuring is typically necessary to ensure that competitiveness results. As experience in the UK has shown, even natural mon- opolies need to have regulation and supervision introduced if effective competition is to be reproduced. Otherwise, privatised enterprises may be able to reap substantial monopoly profits, leaving consumers no better off. Hence, improvements in efficiency do not follow from privatisation per se, but from the benefits that increased competition can bring to the marketplace if it is accompanied by industrial restructuring.

EUROPEAN MANAGEMENT JOURNAL Vol12 No 2 June

As we will illustrate in this article the challenge is to be able to measure the value of the benefits arising as a result of privatisation. This as you will see also raises an important issue that can be linked with valuation method. Wider share ownership was one of the UK government’s widely stated aims for its privatisation and is a partial objective of many of the privatisations we are currently witnessing in Europe, particularly in eastern Europe. Given that the private investor on the continent has always had more affinity with the bond markets, there will have to be a change in order to finance the anticipated privatisation flows. As we will show there is a method of valuation which is not only more appropriate than others more conventionally used, but is also consistent with the shareholder’s perspective.

A Framework for Privatisation Privatisation in the eighties was construed as a generic term for any activity involving the transfer of ownership or service provision rights from the public to the private sector.’ The experience in this connection in recent years would suggest that privatisation may be viewed as consisting of:

Ownership measures . Sale of the state-owned enterprise (SOE) in whole

or in part. . Transfer of the majority equity state to private

hands. . Management buyout or workers’ participation in

the equity liquidation of an existing SOE and formation of new companylies.

. Creation of special shares, so that the quality of output can be controlled even after privatisation.

Organisational measures . Changes in holding company structure. . Leasing out of assets. . Introduction of competition in the hope that this

would be conducive to efficiency financial and technical restructuring in an effort to reduce overt or covert dependence on the public exchequer.

Operational measures . Contracting out setting of targets without chang-

ing the ownership structure: the use of MOUs (Memoranda of Understanding) can be viewed in this context.

. Setting financial return requirements and borrowing limits.

. Encouraging the SOEs to turn to the capital market for long term funds and to the money market for borrowing short term.

. Rationalisation of state control.

That the variety of privatisation alternatives has increased, has also been endorsed recently by The Economist.” By all accounts, there are at least 57 variations of privatisation. This is because sales are made to meet many goals, and in a wide variety of political and economic circumstances. In some countries privatisation is politically easier than in others, governments

191


may be strong or weak, citizens enfranchised or voteless, electorates keen, not so keen or opposed. Some governments have many desirable properties on their books, others little but rubbish. In some countries there are many buyers, whilst in others enterprises must be sold abroad, or given away. However, whatever the circumstances there are usually two overriding aims - to shrink the state so as (hopefully) to achieve greater economic efficiency and the other is to raise cash.

How privatisation will be effected will to a large extent be influenced by how well developed is the process of capital accumulation. The privatisation approaches adopted in Western Europe with relatively well developed mechanisms for personal capital accumulation differ substantially from those in eastern Europe where it is in its infancy. Eastern European countries face a set of choices, some of which we touched upon earlier. Some of these are:

To sell enterprises to national investors, at whatever price the market will bear. Although this is the simplest and at first sight the least conten- tious, it is likely to fail to achieve one key aim insofar as it is unlikely to disperse power away from the old political class. To sell state enterprises to internal and external investors at a fixed price. This has many of the disadvantages of the first method and in addition raises the problem of valuation. Quite simply, what should the fixed price be? To offer enterprises for foreign purchase, either at a fixed price or to the highest bidder. Whilst potentially providing access to Western cash, expertise and potential markets, it is a scheme that has been shown to be haphazard. There is no guarantee of attracting foreign investment and/or of directing it appropriately. Thus, as Hungary discovered, some attractive businesses may be snapped up, but others representing the white elephants of communism were left untouched.

One key point about privatisation is that the issue of valuation is central, as is the ability to diffuse ownership potential. In both eastern and western Europe there is an objective with most privatisation initiatives that citizens of a country can participate in the ownership of national assets.

Government audit institutions seeking to review the impact of privatisation on public assets have been considering several assessment methods, e.g. book value, and the value of potential company assets. Even though it is realised that all these methods have their advantages and limitations, the book value method” has often been viewed most favourably especially in the case of the east European economies where other valuation methods are often impracticable or lead to inaccurate estimates of asset va1ues.l’

Analysts have also expressed concern about the existing methods of valuation and noted that even in the UK

which has fairly sophisticated markets, the valuation of candidates for privatisation is a difficult issue and it is much more of a problem in parts of the developing world and in eastern Europe. They point out that there are four main methods of valuing a business, namely: (a) the price-earnings basis; (b) the asset value basis, with an estimate of goodwill; (c) the discounted cash flow basis; and (d) dividend yield basis. But each approach is only as good as the equity of the financial information from which it is drawn.r3

Valuation for the purpose of privatisation has a parallel in the valuation of unquoted shares.r4 Some researchers15 have concluded that an analysis based on discounted cash flows (usually made use of for capital investment appraisals) is an obvious choice as a valuation technique for unquoted shares, and by impli- cation candidates for privatisation as well, as the purchase or sale of any business is a major investment or disinvestment decision. They note that this method is probably theoretically the most satisfying valuation technique that is not used as frequently as it should be for practical difficulties, i.e. confidence in forecasts. However, it is our contention that despite such practical difficulties this approach, particularly a form of what has come to be known as Shareholder Value Analysis (SVA) is indeed particularly appropriate in such circumstances. Why? A quote by Delman of Bank of America identifies one critical issue - ‘Enterprise management generally lacks a track record of managing a company for a profit . . . ‘I6 As we will illustrate, the approach associated with the generation of relevant input data within SVA helps this, and other problems, potentially to be resolved.

Shareholder Value Analysis - A Valuation Framework for Evaluating Privatisation Decisions? In the world of finance considerable attention has been paid in recent years to the concept of value. A review of acknowledged texts on finance would reveal that a framework for determining the value to be gained from project and even strategic opportunities has long been established, being built around the premise of the maximisation of shareholder wealth.r7 This framework, which is reliant upon the principle of discounted cash flow analysis, has been shown to be superior to accounting based alternatives for many reasons.*”

A key feature of the development of the value based framework has been its emphasis upon one particular stakeholder - the shareholder. This should not be viewed as being too surprising given that the demands for the approach first arose in the United States which is characterised by one of the largest equity markets in which the shares of publicly listed companies are traded freely. In fact, this feature meant that for much of corporate America a price was available for the shares traded publicly. In effect, there was a direct comparator for the perceived value of a corporation, such that if the

192 EUROPEAN MANAGEMENT JOURNAL Vol12 No 2 June 1994


perceived value exceeded the trade price of equity shares an opportunity existed for a purchaser. Such rationale underpinned the concept of the ‘market for corporate control’ in which share price management assumed particular importance and for which the need for measures of perceived value arose. In this environment, Shareholder Value Analysis (SVA) developed and flourished.

A number of SVA models have been developed, but particularly noteworthy is that attributable to Rappaport who with others has demonstrated that strategic decisions can be modelled using a discounted cash flow approach.‘* Key business-related decisions can be expressed as a number of value drivers to produce cash flow forecasts. For example, the following 5 ‘drivers’ can be related to the cash flow generated by a business, such that with a view about current sales revenue a cash flow forecast for future time periods can be readily generated:

. growth rate in sales;

. operating profit margin;

. tax rate;

. fixed capital needs; and

. working capital needs.

The values attached to these drivers are found by asking questions about the dynamics of the business involved. For example, given the market conditions what is the potential for growing sales and the potential operating profit margin which wiII determine cash inflows? Furthermore, what cash outflows will arise as a con- sequence of these inflows, in the form of taxes or government levies, more fixed and working capital expenditure, and replacement capital expenditure.

How are these 5 value drivers brought together? Con- sider the following illustration for a commercial organi- sation which we use to illustrate general principles and then review in the context of a privatisation decision:

Projection Over 5 Year Period and Beyond

Sales (A)

Op. Profit (B) = 10% x (A)

Tax (C) = 30% x (B)

Depreciation

Op. cash flow

Replacement capex

IFCI

IWCI

Year 0 fm

1,500.OO

Free cash flow

Year 1 Year 2 Year 3 Year 4 Year 5 Beyond fm fm fm fm fm fm

1,725.oo 1,938.75 2,281.31 2,623.51 3,017.04 3,017.04

172.50 198.38 228.13 262.35 301.70 301.70

- 51.75 - 59.51 -68.44 -78.70 - 90.51 -90.51

50.00 55,OOo.OO 60.00 65.00 70.00 75.00

170.75 193.76 219.69 248.64 281.19 286.19

-50.00 -55.00 -60.00 -65.00 - 70.00 -75.00

33.75 38.81 44.63 51.33 59.03 0.00

22.50 25.88 29.76 34.22 39.35 0.00

64.50 74.18 85.30 98.10 112.81 211.19

Data Sales value for most recent year: f 1,500m Depreciation for most recent year and assumed to increase by f5m each year for the foreseeable future: f50m

Financial position at end of most recent year:

Fixed Assets

Current Assets Current Liabilities

Net Current Assets

Long-term Loan

Share Capital Reserves

Value Drivers 1. Sales growth rate

fm fm 500

250 125

125

625

100

525

450 75

525

2. Operating profit margin 3. Cash tax rate 4. Incremental Fixed Capital Invest-

ment (IFCI) 5. Increment Working Capital Invest-

ment (IWCI)

Application of Value Drivers - Year 1

15% 10% 30%

15%

10%

Sales = f1,5OOmx(1+0.15) = f1,725m Operating

profit = f1,725m x 0.10 = f172.5m Cash taxes = f172.5m x 0.30 = f51.75m IFCI = f225m* x 0.15 = f33.75 IWCI = f225m x 0.10 = f22.5m

* Incremental sales f1,725m (Year 1) - f1,5OOm (Year 0, i.e. now) = f225m

EUliOPEAN MANAGEMENT JOURNAL Vol 12 No 2 June 1994 193


Having established these cash flows, 2 additional pieces of information are required to convert them into a value - the planning period over which the evaluation is to be conducted and the cost of capital, so that a present value can be determined. In this illustration the planning period has been taken as 5 years and the cost of capital as 12%. Using this information we will show how the free cash flows can be discounted to a present value, added to an estimated residual value and adjusted to produce a figure representing the potential benefit of the strategy to shareholders.r9

SVA Calculation Year Free cash PV of Cumulative

flow free PV cash flow

fm fm fm

1 64.50 57.59 57.79 2 74.18 59.14 116.73 3 85.30 60.73 177.45 4 98.10 62.34 239.79 5 112.81 64.01 303.80 Add: Value beyond year 5r 997.89

Corporate value 1,301.69 Less: Market value of debt 100.00

Shareholder value 1,201.69

1 For year 5: Free cash flow f211,193 divided by 12% and discounted at 0.567.

Using this illustration we have shown how a value to the shareholders of f 1,201_69 million can be calculated using information about perceptions of the future. What is more if we knew the number of shareholders we could calculate a value per share simply by dividing this total value by the number of shareholders.

Many assumptions, like the value of the cost of capital and how to derive value beyond the planning period, have been made within this illustration to demonstrate how a value can be determined. They are extremely difficult to deal with in practice, but have to be realistically addressed irrespective of the valuation method adopted.

These shortcomings aside, a major benefit the SVA approach enjoys over many other financial models is that the resulting benefit or otherwise expressed in financial terms is linked in an obvious way to key business decisions. Furthermore, the relationship between the variables in terms of cash flow generation is made explicit and trade-offs can be examined. Trade- offs like the fact that a substantial increase in sales growth may well increase fixed and working capital needs such as more capacity to manufacture and more stock for use in manufacture. Increased sales growth may well produce substantial future cash flows, but the trade-off may be the need to incur fixed and working capital cash outflows before they are received.

This type of trade-off can be understood in terms of privatisation candidates. The Russian state airline, Aeroflot, may well be thought of as having far greater potential than is currently being realised. It is often characterised as having an aging fleet of aircraft and as being stretched in meeting existing schedules. Any notion of substantial expansion is difficult to imagine as it stands. In answer to the question what is it worth, one answer looking at its asset value as it stands might be, very little. As with many formerly communist regimes to try and gauge profitability from historical trend analysis would likely be fraught with problems. However, start to think of the business in terms of the potential to drive value out and a more positive view might be taken. With substantial fixed and working capital being expended today (cash outflows), sales growth and profitability (cash inflows) could well be achieved over and beyond a given planning horizon.

We believe that the SVA provides a useful framework for evaluating all kinds of privatisation opportunity. All types of privatisation involve taking a strategic perspective characterised by a relatively long-term time horizon and a good deal of risk and uncertainty. In many cases the valuation problems relating to companies are exacerbated in a privatisation decision. Whereas for a company a range of valuation devices may often be applied using asset valuation, earnings, forecast and information about peer groups, none of these may be available and or reliable in valuing potential privatisation candidates. In such an environment a model approach like SVA may well be useful in understanding underlying value from different perspectives. For example, a privatisation directed at attracting foreign investment by foreign investor companies needs to incorporate not only the value as seen by the government, but also that perceived by potential investors.

There is no unique, objective measure of value and in any strategic decision there will be different value perspectives. What is the value of a state owned enterprise in which there has been no substantial investment for many years? As it is maybe very little, but to someone who can see that with substantial fixed working capital investment it may be possible to generate revenues, there may be substantial value. In other words, a framework like SVA may be a powerful conceptual tool to a government considering the privatisation of an industry. By applying the approach we have illustrated involving key value drivers, it should be possible to develop a clearer understanding of the potential benefit to all parties.” However, let us be quite clear. We are not suggesting that all that would be required in practice would be the identification of seven value drivers. We are simply illustrating the principle - reality is far more complex, as anyone who has ever been involved in a real life valuation will tell you!

What else does this type of approach offer in its favour? One clear advantage is that it is cash flow orientated which overcomes many difficulties encountered in



working numbers because of different national conven- tions and other associated issues.22 This is of particular importance in the context of formerly communist countries which until recently operated according to distinctly different accounting and financial reporting practices to those used in the West. Second, from the perspective of those parties who might be interested in privatisation opportunities it is consistent with the discounted casMow principles acknowledged as being appropriate for use in undertaking investment appraisals, whether in a national or an international context. Third, the approach can be viewed as being consistent with intended development of equity markets in most European countries and, whilst a privatisation deal may not initially involve a stock market valuation, there may be the intention on the part of other parties involved for this to be the eventual result. The SVA approach because it is consistent with the valuation of equity from the buyer’s perspective and also with the intended development of a market for equity by the seller potentially has much to offer.

Conclusion We have presented the case for a technique developed for value analysis in connection with business acquisitions and originally focusing upon the shareholder known as SVA as being an appropriate analytical tool for valuing privatisation opportunities. We recognise that the SVA approach is not perfect - what is? There are many issues that have to be addressed, for example, the determination of the discount rate that we have not been able to address within the space of this short article. However, we do believe that this framework that has gained considerable acceptability and respect within the corporate sector has much to offer as a framework for analysing the privatisation decision.

Notes Frydman, R. & Rapacznski, A. (1993). Privatisation and Eastern Europe, Finance and Development, June, 10. Chang, S.Y. & Jones, R.A. (1992). Approach to Privatisation: Established Models and a U.S. Innovation. Government Finance Review, Vol. 8, no. 4, August, 17-21. Schwartz, G. & Lopes, P.S. (1993). Privatisation: Expectations, Trade-offs, and Results. Finance and Development, June, 14. Selling the State, The Economist, August 21-27, 1993, 16. Morgan, Stanley. (1993). European Privatisation. International Investment Research, 21 May. See for example: (a) East-European Economics - Looking Up. The Economist, Dee 19, 1992, 49-50.

7.

8.

9. 10.

11.

12.

13.

14. 15.

16.

17.

18.

19.

20.

21.

22.

(b) Russia under the Hammer. The Economist, Nov 28, 1992, 69-70. (c) Madero, J.F. (1992). Argentina. International Financial Law Review, September, 8-12. (d) Ashton, K. & Cohen, Roger I. (1992). Hungary. lntemational Financial Law Review, September, 24-26. (e) McGown, D. (1992). Sweden. lntemationa~ Financial Law Review, September, 45-50. (f) Toms, B.C. & Campbell, 0. (1992). Ukraine. International Financial Law Review, Sept., 51-55. (g) Russian Privatisation: Free for All. The Economist, July 18, 1992, 70. (h) Sasseen, J. & Kuchan, D. Altered States. International Management. (i) Gold, J. (1992). Removing the Dead Hand of State. Financial World, March 3, 38-43. (j) King, P. (1993). First ‘True’ Privatisation gets ready for Market. Euromoney Journal, 60-61. (k) Popov, G.K. (1992). Moscow‘s Testing Ground for New Forms of Economic and Political Life. Cato journal, Vol. 11, no. 3, Winter, 337-342. (1) Chakravarty, S.N. (1992). Getting the Elephant to Dance. Forbes, Vol. 150, no. 2, July 20, 130-139. Ridding, J. (1994). Aiming for the Leaner Fitter Giant. Financial Times, January 21, 16-19. Hensher, David, A. (1986). Privatisation: an Interpretative Essay. Australian Economic Papers, Vol. 25, no. 47, December. Selling the State. The Economist, August 21-27 1993. Garrido, M. (1992) Auditing the Sale of Public Companies. International Journal of Government Auditing, April, 4, 5. La Follette & McHugh Charles. (1990). Eastern Europe; No Place for the Politically Naive. Mergers and Acquisitions, Vol. 25, no. 3, November/December, 24-25. The Global Sweep of Privatisation: For What it’s Worth. Euromoney, July 1990, p. 8. Glover, Christopher G. (1993). The Valuation of Unquoted Shares. Accounts Digest, April, 1. Glover, Christopher G. Ibid. 28-29. Murphy, H. (1993) The Other Half of Europe. Corporate Finance, June, 46. Brealey, R.A. & Myers, S.C. (1988). Principles of Corporate Finance, McGraw-Hill, 3rd edn. Mills, Roger W. (1993). Strategic Value Analysis: Towards Developing a Financial Framework for General Managers. Journal of General Management. Rappaport, A. (1986). Creating Shareholder Value: The New Standard for Business Performance, The Free Press. For an illustration of the approach see Mills, Roger W. (1993). Strategic Financial Analysis 2. Treasury Today, January. Mills, Roger W. (1993). Accounting for Economic Development. Conference Paper - The Role of Account- ing in Economic Development, International Conference, University of Botswana, February 22-26. Mills, Roger W. (1993). Strategic value Analysis: Towards a Financial Framework for Develooine the General Manager. Journal of General Managemk,“Vol. 18, no. 4. Eiteman, D.K., Stonehill, A.I. & Moffett, M.H. (1992). Multinational Business Finance, Addison-Wesley, 6th edn.

EUI7~3PEAN MANAGEMENT JOURNAL Vol 12 No 2 June 1994


ROGER MILLS, Henley Management College, Greenlands, Henley-on- Thames, Oxfordshire RG9 3AU.

Roger Mills is Professor of Accounting and Finance at Henley Management College where he is also Director of Studies of the Active MBA Programme and Head of the

Accounting and Finance Faculty. He trained as an accountant in industry and is a fellow of several professional associations. He is the co-author of several books on accounting and finance as well as many articles on subjects like strategic financial and value analysis, project appraisal and business valuation.

SYAMAL GHOSH, Indian lnstitute of Management, Calcutta, India.

Syamal Ghosh is Professor at the Indian lnstitute of Management, Calcutta. His academic background is in Economics, Accounting and Finance. He has worked in private industry in lndia and Canada. His publications

include The Framework of the Indian Economy, co-authored with the late Nobel Laureate Sir John Hicks and Professor M. Mukherjee as well as several journal articles.


Documents

The role of strategic value analysis in European privatisation decisions