Public turning private: What is the value?

Sammanfattning: A traditional fundamental valuation cannot be applied to a public organization about to be privatized because of zero profit policy, a high propensity to spend centrally allocated resources and dissimilar accounting compared to private companies. When computing the intrinsic value of such an organization, the state owner should determine potential buyers of the object, and investigate what management control tools are used among these, enabling survival as private companies and depicting operating profit margin levels possible in the sector. Furthermore, implemented management control tools in private organizations are considered in a modified DCF-valuation, where the explicit forecast period is concluded to not add value whereby the recently privatized school is assumed to be in steady state immediately at the time of privatization.