Buying a business in New Zealand: what to check before you commit

Buying a business is one of the biggest financial decisions you'll make. Good preparation, careful due diligence and independent advice are what stop you from paying too much or inheriting problems that weren't obvious at the start.

Know what you're looking for

Start by working out the type of business that suits you. Think about the industry, the size, the hours you're prepared to work, and whether you want to run it yourself or manage a team. Clear criteria will stop you getting swept up in a business that looks good but doesn't fit.

Build your team before you make an offer

Have your advisers lined-up before you sign anything. Once an agreement is signed, its conditions run to deadlines, and there is little time to find help.

• Accountant (that's us): we review the financial statements, test whether the profit is realistic, value the business or critique the seller's figures, and carry out a commercial review of the sale and purchase agreement. We can also advise on structure and tax, form your company, handle tax registrations, and help you set up your systems before you take over.

• Lawyer: reviews the sale and purchase agreement, the lease and key contracts, and handles settlement.

• Bank: confirms your finance and any conditions attached to it.

Remember that a business broker is engaged by the seller. Their job is to achieve a sale on the seller's behalf, so the information and figures they provide isn't independent advice to you. Get your own, from advisers acting for you.

Why the seller's valuation isn't enough

Some sellers provide a business valuation. It was prepared on the seller's instructions and using the seller's information. It may be entirely sound, but it wasn't prepared for you, and you generally can't rely on it.

We can act for you to test whether the profit is sustainable and whether it supports the asking price. That gives you a solid basis for negotiating. The cost of a valuation or critique on your side is far less than the cost of overpaying. For more on how value is assessed, see our article on how business valuation works in New Zealand.

Do your due diligence

Due diligence confirms the business is what the seller represents it to be. Most agreements include a due diligence condition, giving you a set period to investigate before the sale becomes unconditional.

Area	Check	Why it matters
Assets	Ownership and condition of plant, equipment and vehicles, and whether any are subject to finance (search the Personal Property Securities Register)	You want the assets free of any lender's security at settlement
Compliance	Licences, registrations, health and safety records and any disputes	Problems here can become yours after settlement
Contracts	Supplier, customer and franchise agreements, including change-of-ownership clauses	Some contracts end or change when the business is sold
Customers	Who the main customers are and how much of the revenue each provides	Heavy reliance on a few customers is a risk
Digital assets	Phone numbers, domain names, website, social media accounts, software licences and trademarks, and whether each can be transferred	Customers find the business through these. Some licences can't be transferred, and accounts in the owner's personal name need a proper handover
Employees	Employment agreements, pay rates, leave balances, whether payroll complies with the Holidays Act, and which staff are transferring and on what terms	Staff don't automatically move across in an asset sale. Any leave balances you agree to take over become your cost, and some workers have a legal right to transfer on their existing terms
Financials	Three years of financial statements, year-to-date figures, income tax and GST returns, and bank statements	Cross-checking sales in the accounts against GST returns and bank deposits tests whether the profit is real
Premises	Lease term, rent, rights of renewal and whether the landlord will consent to assignment	A short or insecure lease can undermine the whole business
Systems and know-how	Recipes, procedures, manuals, customer lists and supplier terms, and how the seller will hand them over	Much of the value can sit in know-how. If it isn't documented and handed over, you may pay for goodwill you can't use

If you're buying a business with cleaning, food catering or similar staff, check whether Part 6A of the Employment Relations Act 2000 applies. It gives some employees the right to transfer to the new owner on their existing terms and conditions.

Protect yourself in the agreement

The sale and purchase agreement is where your protections sit. Your lawyer will advise on the detail, but these are the terms buyers most often need to negotiate.

• Restraint of trade: stops the seller from opening a competing business nearby. Check the area and the time period are realistic for the business.

• Training and handover: a set period of support from the seller after settlement. This matters most where customer relationships are personal to the seller.

• Warranties: the seller's promises about the accounts, assets and compliance. They give you recourse if something turns out to be wrong.

• Stock and working capital: how stock is counted and valued at settlement, and what happens to money owed by customers and to prepaid expenses.

Get the structure and tax right when buying a business

Buying assets or shares. Buying assets means you buy the business and its assets, then trade from your own entity. Buying shares means the shares in the existing company transfer to you, and you take on everything that comes with it: its assets, liabilities, bank accounts and history, including any past problems. You also inherit its tax history, and tax losses or imputation credits may be lost on the change of ownership. A share purchase needs closer due diligence.

Your ownership structure. You may want to set up a new company to buy the business, sometimes with the shares held by a trust. The right structure depends on your personal situation, your attitude to risk, asset protection, and how you plan to take money from the business, whether as pay for your work or as a return on your investment. We can help you work out what suits you.

Purchase price allocation. In an asset purchase, the price is split between stock, plant and equipment, and goodwill. The split matters to you: plant and equipment can be depreciated, but goodwill can't. Buyer and seller must use the same allocation for tax, so agree it in the sale and purchase agreement. If you don't, for purchases of $1 million or more the seller has the first right to set it. We explain these rules in our article Purchase Price Allocation in NZ: A Practical Guide.

GST. If both you and the seller are GST-registered and the business is sold as a going concern, the sale is zero-rated, meaning no GST is charged. The agreement needs to record this correctly, and you must be registered for GST by settlement. If it isn't handled properly, GST may be payable on top of the price, depending on how the price is worded, and you would need to fund it until you claim it back.

Registrations and setup. If you're taking on staff, you'll need to register with Inland Revenue as an employer before the first payday. Setting up your accounting system and bank accounts before settlement makes the first few weeks much easier.

Getting help

Whether you're in Nelson Tasman or elsewhere in New Zealand, we can help you review the sale pack (information memorandum) and financials, work through due diligence, set up the right structure, and value the business or critique the seller's figures before you commit.

Thinking about buying a business?

Call us on 03 544 4772 or email info@businessstudio.co.nz to talk through your plans.

Last reviewed: 7 November 2026

Disclaimer: The information in this article is general in nature and is not personalised business, legal or tax advice.