Start with the complete funding requirement
The purchase price is only one part of buying a business. The buyer may also need funds for stock, professional advice, assignment costs, licences, fit-out work and working capital after settlement.
Build a complete uses-of-funds schedule so the new business is not underfunded on its first day.
Understand what is being purchased
The transaction may involve company shares, business assets, stock, intellectual property, customer contracts, a lease or a mixture of these. The legal, tax and risk consequences differ.
Use a lawyer and accountant experienced in business purchases. Finance approval should not be treated as confirmation that the business is worth buying.
Due diligence questions
- What exactly is included and excluded?
- Why is the owner selling?
- Which revenue and costs are recurring?
- Are customer, supplier and employment arrangements transferable?
- What working capital will be needed after settlement?
- Are licences, leases or key contracts dependent on consent?
- What liabilities could remain with the entity?
Business.govt.nz provides general guidance on starting, buying or franchising a business.
Property-secured acquisition finance
Where suitable New Zealand real estate is available, property-secured business finance may support a deposit, settlement requirement, purchase price or initial business costs. The property may belong to the buyer or another relevant party prepared to provide security, subject to ownership, consent and legal assessment.
HomeSec’s current lending range is $20,000–$1,000,000. A new entity or limited trading history does not automatically prevent consideration, but the business purpose, property and repayment plan must be credible.
Prepare the finance scenario
Provide the sale and purchase timetable, purchase price, deposit already paid, complete funding requirement, buyer contribution, security-property information and the expected repayment or refinance path.
Also explain who will operate the business, their relevant experience and what will happen between settlement and stable trading.
Allow time for conditions
Urgent funding may be possible, but the purchase agreement, lease, licences, finance, legal due diligence and security documents can each affect timing. Avoid committing to an unconditional date without advice about the conditions the buyer still needs.
Plan for the first six months
Model conservative revenue, supplier payments, wages, tax, rent and unexpected costs. An approved HomeSec facility may offer up to six months with no payments, but this is not an interest-free period and the precise settings depend on the loan contract.