CORPORATISATION AND ASSET VALUATION FOR A GOVERNMENT CORPORATION |
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| Authors: | John Buchanan Robert G Bowman |
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| Institution: | The authors are respectively, Lecturer in Management Science and Systems at the University of Waikato, Hamilton, New Zealand;and Professor of Finance at the University of Auckland, New Zealand. The first author was a Senior Consultant with Price Waterhouse Management Consultants while the work described here was undertaken. The authors acknowledge the cooperation and helpful comments of Mike Foden, the general manager of the Government Computing Service, in preparing this article. |
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| Abstract: | This paper reports the asset valuation procedures used in the corporatisation of a New Zealand state owned enterprise. Determination of an equitable valuation is crucial to the subsequent (equitable) monitoring of management performance and also in anchoring the expected value of the business in the wake of privatisation. The process used to arrive at the asset valuation consisted of two distinct stages: methodology choice and implementation. The separation of the two steps was an important factor in reaching a speedy and well received valuation. The process is discussed in some detail. The result was a valuation derived from a theoretically sound base (i.e., net present value) yet consistent with more pragmatic commercial realities. |
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