Most of those problems can be seen coming. This guide sets out how selling a business works in NZ, step by step, and where sales tend to stall, so you can plan around it.
Three decisions to make first
Why are you selling? Retirement, burnout, a new venture and a health scare all lead to very different timelines. A buyer will ask, and your answer needs to be honest and calm.
When do you need to be out? If you can give yourself 6 to 12 months to prepare, you'll usually get a better result than selling in a hurry.
Who is the likely buyer? A staff member, a family member, a competitor or someone on the open market. Each one changes how you market the business and how much you reveal.
The steps to sell your business
1. Get a realistic price
Start with what the market will pay. What you need for retirement is a separate question. A broker's appraisal works this out from your adjusted earnings and recent comparable sales, and ours is free and confidential. Overpricing is the most common reason a business sits on the market for months.
2. Prepare the business
Buyers pay for earnings they can trust and a business that runs without you. Cleaning up the accounts, securing the lease and stepping back from day-to-day work all lift the price. Preparing your business for sale is where the biggest gains usually come from.
3. Decide how you'll sell
You can sell privately or through a licensed broker. Private sales can work well when you already know the buyer. For an open-market sale, a broker handles the marketing, buyer screening and negotiation. If you're weighing it up, compare a broker vs private sale on cost, time and risk.
4. Market it without giving the game away
Listings describe the business without naming it. Serious buyers sign a confidentiality agreement before they see the information memorandum, which sets out the business, its figures and the opportunity. Keeping the sale quiet protects your staff, customers and price, and selling confidentially takes planning from day one.
5. Screen buyers and negotiate
Buyers are checked for funding and genuine interest before they meet you. Once an offer is on the table, price is only part of it. Settlement date, handover period, conditions and stock all get negotiated too.
6. Sign the agreement
The deal is recorded in a sale and purchase agreement, usually on the standard form for business sales. Have your lawyer review it before you sign. That's a step your broker is required to recommend.
7. Get through due diligence
The buyer checks your figures, lease, staff arrangements and anything else that affects value. This is where well-prepared sellers pull ahead. Have your records ready before you list.
8. Settle and hand over
On settlement day the money moves, stock is counted and the keys change hands. Most agreements include a handover period where you train the new owner, often a few weeks.
The whole business sale process, from first appraisal to settlement, commonly takes several months. The sale itself is only one part of the timeline.
What sellers most often get wrong
Telling staff too early, or too late. Early news can unsettle the team. Late news can leave a buyer worried key people won't stay. Usually, key staff hear once a buyer is conditionally committed.
Letting the business slide during the sale. Buyers watch trading closely between signing and settlement. A dip in sales can reopen the price.
Ignoring tax until settlement. GST, depreciation recovery and how the price is split across goodwill, plant and stock all affect what you keep. Talk to your accountant before you sign anything.
Taking the first offer without checking the buyer. An offer from someone who can't get finance costs you weeks and momentum.
Selling with Milan
Milan Kruger is a business broker licensed under the Real Estate Agents Act 2008. He works with owners from the first appraisal through to settlement: setting the price, marketing confidentially, screening buyers and keeping the sale on track through due diligence.
If you're thinking about selling in the next year or two, start with a free, confidential appraisal. You'll get a written opinion of what your business would sell for and what would lift the price. You can also email Milan directly at milan@sellmybusinessnz.co.nz.
Book a free, confidential appraisal
Selling a business: common questions
Do I need a lawyer to sell my business?
Yes. A lawyer reviews the sale and purchase agreement, advises on conditions, the lease and restraint of trade, and manages settlement. Brokers are required to recommend you get legal advice before signing.
What happens to my lease when I sell?
In most asset sales the lease is assigned to the buyer, which needs the landlord's consent. Check early whether you'll remain liable under the lease after assignment, as many leases keep the original tenant or guarantor responsible.
What happens to my staff?
In a typical asset sale, your staff's employment with you ends and the buyer may offer them new roles. Some industries, such as cleaning and food catering, have extra protections that let employees choose to transfer on their existing terms. Get employment advice before telling your team.
Do I charge GST on the sale?
If you and the buyer are both GST-registered and the business is sold as a going concern, the sale is usually zero-rated. Your accountant should confirm this before you sign.
Can I sell my business without a broker?
Yes. Many owners sell to staff, family or a competitor they already know. For an open-market sale, most owners use a broker for buyer reach, confidentiality and negotiation.