The Bulgarian Privatization Law allows the use of extremely wide-ranging privatization techniques, incl. different modes of preferential treatment for the same privatization objects and potential buyers. Potential buyers are often hesitant and tend to put off the deals, owing to:

- insufficient knowledge of the legislation and existing regulations, both on their part and on the part of practicing consultants and most state authorities;
- the lack of experience in the implementation of particular privatization methods. The implementation of auctions and tenders is generally fairly developed but the other techniques are as yet not familiar enough.

Another reason for the reluctance of potential buyers to make firm commitments after the start of privatization in 1993 was related to the imminent changes in the Privatization Law. They were widely expected to introduce stronger preferential terms for employees and tenants, and possibly to shorten and simplify privatization procedures.

The new owners of the enterprises privatized before the adoption of the changes very often regretted not having been able to use some of the advantages provided by the amended Law. This would become even more conspicuous should the preferential provision for the buying of small enterprises without auctions or tenders come to be widely implemented. That would have discriminatory implications for the buyers under the initial and the amended Law with respect to the post-privatization operation of the enterprises. However, there will hardly be serious problems as only a particular type of buyers are concerned - employees, and because of the quite limited number of companies privatized in 1993.

In order, however, to avoid the rise of new expectations for further strengthening or modifications in the provided preferences, it is necessary to pursue a policy securing the stability and thoroughness of the adopted legislation and regulations.

The study has shown that one of the chief problems of the enterprises in the process of privatization is the lack of know-how and information about the procedures, techniques and legislative framework. The competent state authorities, as well as other concerned organizations, should therefore launch an information campaign for the popularization and clarification of the content, advantages and disadvantages of the various privatization techniques. This would be of considerable help to the potential participants and would in many cases actually generate interest in privatization.

Concerning the characteristics of the privatization transactions concluded up to now, we can make the following conclusions:

First, the financial conditions for participation in the privatization of similar or comparable objects tend to vary significantly. The case studies suggest that this is not so much due to the different market value as determined by the character and location of the particular objects, but rather, depends on:

- the authority carrying out the privatization;
- the privatization technique implemented by the respective authority.

There are a number of other transactions of privatizing character related to the activity of the liquidation boards, liquidators, or in the case of execution for the purpose of satisfying creditors.

The different prices at which similar from a market point of view objects may be bought from the different authorities and under the different privatization techniques are a cause for segmentation and disturbances on the market. They deter certain buyers by encouraging expectations for "cheaper" deals.

However, this problem is difficult to overcome owing to the large number of privatizing authorities and possible techniques, as well as to the lack of established tendencies on the real estate, corporate and security markets. At the same time this impedes the formation of stable market tendencies and correlations.

Second, the presence of non-financial conditions in privatization transactions has been common practice up to now. In the studied cases those include commitments to make additional investments, preserving and/or increasing the number of jobs, ecological activities and commitments, etc.

Table 1

Formally, the non-financial conditions are likewise obligatory in the privatization by tendering or negotiations. They are typically deemed to be of secondary importance set against the price of the objects or the amount of the liabilities to creditors that the new owner would take on. That is related to:

- the too formal and general character of the non-financial conditions;
- the lack of objective possibilities for metrication and commensurability of the non-financial conditions;
- the lack of adequate regulation and possibility for post-privatization control, which is indispensable with respect to the non-financial conditions;
- the lack of experience and the deficient regulations lead to a general stipulation of the non-financial conditions in the sale contract without securing the necessary operativeness of their individual elements and without a mutual interdependence with the transaction as a whole.

In a number of sale contracts the non-financial conditions constitute conditions of deferment or termination of the contract without being an essential part of the transaction. This produces a certain insecurity and de facto sometimes proves to be an unnecessary burden on the new owners.

Certain conditions (for instance, "number of jobs", "amount of additional investments", "term for making ecological improvements", "preserving the field of activity for a certain period") in some cases have a purely formal character with respect to the interests of the seller or the public interest. Yet they have a prolonged effect as a mandatory framework for the new owners, limiting their free economic initiative and the efficiency of their decisions.

From this point of view it is necessary to pursue a policy of restricting the non-financial conditions of the privatization transactions. That would simplify the procedures, would make the choice of the respective buyers more transparent and unequivocal, and would facilitate post-privatization control. In the cases when the contract explicitly stipulates non-financial conditions the latter should be sufficiently functional and clear-cut, and preferably quantifiable in some way.

Third, it is the conclusion of the privatization transactions and the post-privatization control that give rise to the most serious problems to the parties to the contracts. The insufficient experience and practice in the sphere of contractual relations as a whole, especially in the field of privatization transactions, lead to the search for simpler solutions in the transfer of property rights.

The study has shown that privatization is not completed with the conclusion of the transaction. There emerges a tendency towards prolonging privatization both on account of problems arising with already concluded transactions and owing to the transition to methods of payment requiring subsequent transfer of ownership. Experience has shown that a number of actual circumstances and problems are not regulated efficiently enough in the contracts for the privatization of enterprises, such as:

- subsequent finding of unknown prior to the conclusion of the transaction defects in the respective privatization objects - in facilities, equipment, infrastructure. This is largely due to imperfect preparation and conclusion of the privatization transaction;
- deterioration of the property and financial state of the enterprises subject to privatization. Experience has shown that this process is nearly always present and develops extremely rapidly, especially in the period from the conclusion of the contract until the new owner actually assumes possession;
- finding of undisclosed as a result of poor financial and legal discipline liabilities and legal obligations (mortgages, property put up as security, etc.);
- nonfulfillment on the part of the buyer of certain stipulations of the contract for financial and non-financial commitments of the new owner.

One extremely serious question generating tension in the seller-buyer relations is post-privatization control. The analyzed cases indicate that at this stage such a control is only exercised by the Privatization Agency. To a certain extent that is understandable in view of the short period of time since the conclusion of the transactions (approximately a year has passed since the conclusion of the first more substantial transactions). In most cases the stipulations of the contracts refer to a period of 3 or 5 years.

Furthermore, the attention of the privatizing authorities is focused on the problems related to the increasing number of privatization procedures. The scope and significance of post-privatization control will inevitably grow. With the increase in the number of privatization transactions under the conditions of deferred payment, payment by instalments where the ownership remains with the seller and is to be transferred subsequently, as well as leasing or management with a buy-out clause, etc., post-privatization control will also be exercised by extending the privatization procedure itself until the final transfer of ownership.

Due to the limited scope of privatization and the virtually non-existent post-privatization control there have occurred no instances of annulment of privatization transactions owing to nonfulfillment of sale contract stipulations. There have been cases of dissolution shortly after the conclusion of the sale contract largely due to nonpayment of the agreed price by the buyer within the specified term. However, such developments are certain to arise in the future, with the speeding up of privatization and the growing number of privatization transactions. Therefore, in order to facilitate and optimize post-privatization control it is necessary to conduct a policy of minimizing the conditions of the transactions, as well as their clear-cut definition and if possible, their metrication.

That will facilitate the task of the privatizing authorities which are also supposed to exercise the control. It will further strengthen the security and enhance the economic freedom of the new owners in the management of the privatized enterprise.

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