Growing Your Business Through Business Acquisition in New Zealand

If you are looking to up-size your business, sometimes it pays to look outside of the square.

One of the most effective and immediate ways to up-size your business is to buy your competitor (ie. business acquisition). This method can also be one of the most cost-effective ways of growing your business and securing new customers.

In addition to increasing your customer base there are also trained staff who understand the business and its customers, systems, and potentially a new culture. For many New Zealand business owners, acquisition offers a faster, more strategic path to scale than organic growth alone.

The Benefits of Business Acquisition

The benefits of business acquisition extend well beyond revenue growth.

By acquiring an existing business, you can:

Instantly increase market share and customer numbers
Eliminate or reduce competition
Acquire skilled staff and established systems
Gain access to new locations, suppliers or distribution channels
Improve purchasing power and operating efficiencies

The decision to buy your competitor may be made for strategic reasons, as with the purchase of Trade Me by Australian media giant Fairfax, who paid $700 million to secure a strategic foothold in the online auction and classifieds market. Over recent years niche market specialists and players like Trade Me have eroded market share from some of the more traditional advertising mediums.

The alternative is to grow your business slowly over time. With effort, you can improve existing systems to increase sales, thereby creating a larger, more profitable and valuable business. However, organic growth often takes years, while acquisition can deliver immediate results.

What Are the Three Acquisition Strategies?

There are three core acquisition strategies commonly used in New Zealand business:

Horizontal Acquisition
Buying a direct competitor to increase market share, remove competition and strengthen your position in the same industry.
Vertical Acquisition
Acquiring a supplier or distributor to gain control over your supply chain, reduce costs and improve reliability.
Conglomerate or Diversification Acquisition
Purchasing a business in a different industry to diversify risk and open new revenue streams.

Each strategy should align with your long-term business objectives and growth plan.

What Are the Main Types of Acquisitions?

The main types of acquisitions include:

Asset Purchases: Buying specific assets such as equipment, stock, goodwill or customer lists.
Share Purchases: Buying the shares of the company and taking ownership of the entire entity.
Friendly Acquisitions: Where both parties agree to the transaction.
Hostile Acquisitions: Rare in small business, but where a takeover occurs without management support.

Choosing the right structure has important tax, legal and risk implications, so professional advice is essential.

Strategic Planning Before You Buy

Bear in mind that business acquisitions should occur as part of a strategic plan, not just because an opportunity is available. You will need to identify long and short-term objectives, desired personal, strategic and operational goals.

Develop a profile of the type of business that would best suit your needs. It can be a good idea to discuss your ideas at an early stage with your accountant and lawyer.

Once you have made the decision to acquire a business, the next step is to search the market for one that is suitable and meets your criteria. And subscribe to our latest business for sale listings bulletins.

Growth by Business Acquisition: Building the Right Team

When looking to purchase an existing business it is prudent to pull together an “acquisition team”. This team should include your banker, accountant and lawyer. These advisors are important in helping get a good strategic fit and in reviewing and verifying all the relevant information about the business you are considering.

The company’s reputation and the strength of its business relationships also need assessing. Talking to existing customers, suppliers and vendors about their relationship with the business can assist in building the company’s profile.

The Five Key Components of the Acquisition Process

A successful acquisition typically follows five critical steps:

Strategy and Target Identification
Define your acquisition objectives and identify suitable businesses that meet your profile.
Initial Evaluation
Assess strategic fit, market position, reputation and preliminary financial performance.
Due Diligence
Review balance sheets, income statements, cash flows and tax returns. These documents are key indicators of a business’s ability and will help highlight any underlying problems.
Valuation and Negotiation
Examine the asking price, expected returns and integration costs, and negotiate favourable terms.
Integration and Implementation
Map how you will integrate the acquired business with your current operation, including systems, staff and culture.

You will also need to map the potential benefits and examine all key elements identified in your ideal business profile to confirm it is the right move in building your business.

In Summary

Business acquisition remains one of the most powerful growth strategies available to New Zealand business owners. When planned carefully and executed with expert advice, buying a competitor or complementary business can fast-track your growth, strengthen your market position and significantly increase long-term value.

Frequently Asked Questions About Business Acquisition in New Zealand

What is business acquisition?
Business acquisition is the process of buying an existing business or a competitor to grow faster, increase market share and secure established customers, staff and systems.

What are the main benefits of business acquisition?
The key benefits include immediate revenue growth, reduced competition, access to trained staff, established customer bases, proven systems, and faster market expansion compared to organic growth.

What are the three acquisition strategies?
The three main acquisition strategies are horizontal acquisition (buying a competitor), vertical acquisition (buying a supplier or distributor), and diversification acquisition (buying a business in a different industry).

What are the main types of acquisitions?
The most common types are asset purchases, share purchases, friendly acquisitions and, less commonly in small business, hostile acquisitions.

What are the five key components of the acquisition process?
The five key components are strategy and target identification, initial evaluation, due diligence, valuation and negotiation, and post-acquisition integration.

Should I buy a competitor or grow organically?
Buying a competitor can deliver faster results and immediate scale, while organic growth takes longer but may involve less risk. The best approach depends on your strategy, capital and long-term goals.

Who should be part of my acquisition team?
Your acquisition team should include your banker, accountant and lawyer to assess strategic fit, manage funding, review financials and ensure legal compliance.

Where can I find businesses for sale in New Zealand?
You can search online marketplaces such as NZBizBuySell, contact business brokers, industry networks and professional advisors for suitable acquisition opportunities.

When purchasing any business always seek professional advice.

If you're about to buy a business and need business finance or would like to find out more on how much you can borrow then visit bizfinance.

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