Asset Sales for Dummies

Asset Sales, as Labour like to call them, or mixed ownership which is more accurate is something that people who have precious few assets struggle to understand.

Labour keeps liekning a dam on a river to your own home. They are wrong on so many levels. Since they appear to be congenitally stupid or just have never actuallyhad to raise capital we really need an easy way to understand the whole concept.

It has taken a blogger to write an explanation that even pinkos can understand.

Say you own a business.? You have invested a lot of your capital into it (this is where it may get hard for pinkos to understand, as they have probably never experienced this) and growth is stable.

You need to expand, but you are wary of taking on debt to fund your expansion.? You?ve also had your production manager come and tell you that you are going to need to reinvest in new technology and replace machinery to keep up with the play and ensure you remain competitive.? There?s also the small matter of your factory needing a new roof.

You know there are a few people keen on your business, but you don?t want to lose control of it after working so hard.? So you approach them and say ?hey, for X dollars, you can buy up to 10% of my company.?? You ensure you retain 51% ownership, and sell two lots of 10% shareholdings and a lot of smaller shareholdings up to the 49% level.

You have the money to fund expansion, buy that new and replacement equipment, and fix up the roof.? Without taking on new debt.

And that, in a nutshell, is how state-owned asset sales will work.? So it?s either a question of paying more in tax to pay for the interest on debt incurred by (say) energy companies, or selling minority shareholdings to fund what the companies need to remain competitive.? I know which one I?d choose.