Thinking about selling your business? One of the best things you can do is start planning before you actually put it on the market.
“Don't wait until you're ready to sell. Plan your exit early while the business is performing well.”
Selling a business is rarely an overnight decision. For many New Zealand business owners, it represents years of hard work and a significant part of their personal wealth. The way you prepare, when you sell and how you present the opportunity can all influence the quality of buyers you attract and the outcome you achieve.
The key is to plan your exit while the business is performing well, rather than waiting until you have to sell.
This page is about that planning stage – what to think about before going to market, what can be improved, who to involve and how to prepare your business for a successful sale.
Planning to Sell? Start Here
You don't need to have everything worked out before you start planning. Begin by answering these questions:
- Why do I want to sell?
- When would I ideally like to exit?
- What do I need financially from the sale?
- What would make my business attractive to a buyer?
- What needs improving before I go to market?
- Who should I speak to about the sale?
- How will I find potential buyers?
- How can I keep the sale confidential?
Working through these questions early can turn selling a business from a rushed decision into a planned business exit.
When Should You Start Planning to Sell?
Ideally, start planning 12 to 24 months before you expect to sell. You don't necessarily need to make major changes, but having time on your side gives you more options.
For example, you may have time to improve profitability, tidy up financial records, document business systems, reduce unnecessary expenses, strengthen your management team or address contracts and leases.
However, not every owner has the luxury of planning years ahead. If you want to sell within the next few months, it is still worthwhile preparing properly before going to market.
The important point is simple: don't wait until the day you want to sell to start preparing the business for sale.
Why Timing Matters When Selling a Business
The best time to sell is not necessarily when you are most tired of running the business. A buyer is more likely to be attracted to a business that has a credible future, sound financial performance and opportunities for continued growth.
Consider whether your business is currently:
- Trading profitably and generating reliable cashflow
- Showing stable or improving performance
- Well organised and reasonably systemised
- Supported by capable employees
- Operating in a market with ongoing demand
- Less dependent on you personally
If several of these areas need attention, planning ahead may allow you to improve the business before you sell.
Know Why You Are Selling
Your reason for selling does not need to be complicated, but you should be comfortable explaining it to a potential buyer.
Common reasons New Zealand owners sell include:
- Retirement
- A change in lifestyle or priorities
- Moving to another business or investment
- Relocation
- Health or family considerations
- Realising the business has reached the right stage for a new owner
- Taking advantage of strong market conditions
Your reason for selling can also help determine your preferred timing, the type of buyer you want and how you communicate the opportunity.
What Makes a Business Attractive to Buyers?
Before putting your business on the market, try looking at it from a buyer's perspective.
Buyers are generally interested in more than last year's turnover. They want to understand the earnings, risks, systems, customers, assets and future potential of the business.
Areas worth considering include:
- Profitability: Is the business producing sustainable earnings?
- Cashflow: Are earnings reasonably consistent and understandable?
- Customers: Is revenue diversified or dependent on a small number of customers?
- Staff: Can the business operate effectively without the owner doing everything?
- Systems: Are important procedures documented and transferable?
- Market position: Does the business have a competitive advantage or loyal customer base?
- Growth: Are there realistic opportunities for a new owner to grow the business?
- Assets and contracts: Are important leases, licences, agreements and assets in good order?
These are not just due diligence issues. They are things worth thinking about well before you advertise your business.
Make the Business Less Dependent on You
Owner dependence can be an important consideration when planning a business sale.
If customers come to you personally, you hold all the key relationships, or you are the only person who knows how the business operates, a buyer may see greater transition risk.
Before selling, consider whether you can:
- Document important processes and procedures
- Delegate more responsibility to key employees
- Introduce or strengthen management systems
- Transfer important customer relationships to the business
- Record supplier and operational information
- Reduce unnecessary reliance on the owner
A business that can continue successfully under new ownership is generally easier to explain and present to prospective buyers.
Get Your Financial Information Ready
Financial information is likely to be one of the first things a serious buyer will want to understand.
Before going to market, talk to your accountant about getting your financial information organised and easy to explain. Buyers and their advisors will want to understand the trading history and the underlying earnings of the business.
It is useful to have:
- Up-to-date financial accounts
- Recent management accounts where appropriate
- Sales and profit trends
- Details of significant or unusual expenses
- Information about assets and liabilities
- Details of major customer or supplier relationships
Don't try to make the financials look artificially better just before selling. Sustainable performance and credible information are more valuable than a short-term spike that a buyer cannot repeat.
Think About What the Business Is Worth
It is sensible to form a realistic view of your business's potential market value before deciding on an asking price.
Business value can be influenced by profitability, sustainable cashflow, industry, size, location, assets, customer concentration, owner dependence, growth prospects and the risks associated with the business.
It can also be influenced by what buyers are currently prepared to pay for comparable businesses.
Don't confuse the amount you need from the sale with the market value of the business. Your accountant, business broker or suitably qualified valuer can help you understand the difference.
For more detail, see our guide to valuing a business for sale in New Zealand.
Decide How You Want to Sell
Planning also means deciding how you want to take the business to market.
For many New Zealand owners, the main choices are:
- Sell privately: You manage the marketing, enquiries and sale process yourself.
- Use a business broker: A broker can assist with positioning, marketing, buyer enquiries and negotiations.
- Use an online business-for-sale marketplace: This can give your business exposure to active business buyers.
- Combine approaches: For example, use a specialist listing platform alongside your existing networks or professional advisors.
There is no single approach that suits every business. Think about the size and complexity of the business, confidentiality requirements, your available time, likely buyers and how widely you need to market the opportunity.
Plan Your Buyer and Marketing Strategy
Before advertising, think about who is most likely to buy your business.
Potential buyers may include an existing business owner looking to expand, an investor, a first-time business buyer, an industry participant, a management team or someone looking for a lifestyle business.
Understanding your likely buyer can influence how you describe and market the opportunity.
It is also worth considering how widely you need to advertise. A business advertised to only a handful of people may never reach the strongest potential buyer.
Online business-for-sale marketplaces, business brokers, industry contacts, professional networks and direct approaches can all play a role.
Our guide to who will buy your business can help you think through your likely buyer.
Protect Confidentiality From the Start
One of the biggest concerns for business owners is that employees, customers or competitors will discover the business is for sale before the owner is ready to tell them.
Confidentiality therefore needs to be part of your planning.
Think carefully about what information is included in initial advertising and what information should only be provided to a genuinely interested buyer after appropriate confidentiality arrangements are in place.
A good marketing strategy should aim to achieve wide exposure without unnecessarily identifying the business.
This balance is particularly important in smaller New Zealand communities where customers, employees and competitors may know each other.
Prepare an Information Memorandum
An Information Memorandum, sometimes called an IM or sale memorandum, is an important planning tool when presenting a business for sale.
It should give a prospective buyer a clear understanding of the opportunity without unnecessarily revealing commercially sensitive information.
Depending on the business, it may cover:
- Business history and ownership
- Products and services
- Market and competitive position
- Customers and suppliers
- Operations and staffing
- Premises and leases
- Assets included in the sale
- Financial performance
- Future opportunities
- Reason for sale
- Indicative price and sale terms
Be accurate and honest. If there are known issues, it is usually better to understand and explain them properly than allow a buyer to discover them later and lose confidence in the information provided.
Choose Your Professional Team Early
Planning ahead gives you time to choose the right advisors rather than finding them when a buyer is already waiting.
Depending on your circumstances, your team could include:
- Accountant: financial preparation, tax considerations and financial advice
- Business broker: market positioning, buyer sourcing, advertising and negotiation
- Lawyer: sale structure, agreements, contracts and legal matters
- Valuer: an independent valuation where appropriate
Choose professionals with relevant business sale experience. Selling a business is different from selling a house or other personal asset, and specialist knowledge can be valuable.
A Simple 12-Month Business Sale Planning Checklist
| Timing | What to consider |
|---|---|
| 12+ months before | Decide whether selling is the right exit strategy; identify improvements that could strengthen the business. |
| 6–12 months before | Review financial performance, systems, staff responsibilities, contracts, lease arrangements and owner dependence. |
| 3–6 months before | Discuss valuation and sale options with your advisors; identify likely buyers and consider your marketing strategy. |
| 1–3 months before | Prepare financial information, Information Memorandum, advertising material and confidentiality procedures. |
| Ready for market | Choose your sales channel, launch the marketing campaign and manage buyer enquiries carefully. |
Don't Wait Until You Have to Sell
The biggest advantage of planning early is that it gives you choices.
If you suddenly need to sell because of retirement, health, a change in circumstances or another unexpected event, you may have little opportunity to improve the business first.
By contrast, an owner who starts planning well ahead can continue running the business normally while gradually improving its financial performance, systems, management structure and transferability.
You don't have to put your business on the market simply because you start planning. Good exit planning gives you the flexibility to decide when the timing is right.
Common Mistakes When Planning a Business Sale
- Waiting until you are desperate to sell – this can reduce your negotiating position.
- Assuming your business is worth what you need from it – market value and personal financial requirements are different.
- Ignoring owner dependence – buyers want confidence that the business can continue after handover.
- Neglecting the business while preparing to sell – keep running it as normal and protect performance.
- Revealing the sale too widely – confidentiality should be planned from the beginning.
- Using too little marketing – a limited buyer pool can limit your chances of achieving a strong result.
- Trying to do everything yourself – experienced accounting, legal and business sale advice can be very worthwhile.
Ready to Start Planning?
You don't need to put your business on the market tomorrow. Start by understanding where your business stands today and what you would like the sale to achieve.
Then give yourself time to improve what you can, assemble the right advice and develop a marketing strategy that reaches the right buyers while protecting confidentiality.
If you are considering selling your New Zealand business, NZBizBuySell can help you understand your options for marketing your business to active business buyers.
Find out how to list your business for sale or explore our business selling resources.
Frequently Asked Questions About Planning to Sell a Business
How early should I start planning to sell my business?
Ideally, start planning 12 to 24 months before you expect to sell. This gives you time to improve profitability, systems, management structure and other factors that may influence buyer interest. If you need to sell sooner, there are still useful preparation steps you can take.
What should I do before selling my business?
Start by reviewing your financial performance, business systems, staff responsibilities, customer base, contracts, premises and owner dependence. It is also useful to consider your likely buyer, potential market value and how you will market the business.
What makes a New Zealand business attractive to buyers?
Buyers generally look for sustainable earnings, reliable cashflow, a strong customer base, effective systems, capable staff, manageable risk and opportunities for future growth. The importance of each factor varies between industries and businesses.
Should I tell my employees that I am planning to sell?
There is no single answer because every business and sale is different. Confidentiality can be important when preparing a business for sale, particularly where premature disclosure could concern employees, customers, suppliers or competitors. Discuss the appropriate approach with your professional advisors.
Do I need a business broker to sell my business?
No. Some owners choose to sell privately, while others use a business broker to assist with marketing, finding buyers and managing enquiries and negotiations. The right approach depends on your business, circumstances, time available and desired level of support.
How long does it take to sell a business in New Zealand?
There is no standard timeframe. The time required can vary considerably depending on the type and size of business, price, buyer demand, finance availability, market conditions and the complexity of the transaction.
Should I improve my business before putting it up for sale?
Where practical, yes. Planning ahead can give you time to strengthen profitability, systems, management and other areas that may make the business more attractive to buyers. Avoid making changes solely to create a short-term result that may not be sustainable.
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