While every transaction is different, most business sales in New Zealand follow a recognisable sequence. A business is brought to market, prospective buyers make enquiries, suitable buyers receive further information, an offer is negotiated, the buyer carries out due diligence, the agreed conditions are satisfied, and the transaction proceeds to settlement.
The basic process is:
List → Enquiry → Qualify → Confidentiality → Information → Offer → Agreement → Due Diligence → Unconditional → Settlement → Handover
This page provides a simple overview of what happens during a typical business sale. It is not intended to replace legal, accounting or professional advice for a particular transaction.
The Business Sale Process at a Glance
| Stage | What happens? |
|---|---|
| 1. Business is offered for sale | The business is marketed to potential buyers, either privately or through a business broker. |
| 2. Buyer enquiry | A potential buyer makes an initial enquiry and receives basic information about the opportunity. |
| 3. Buyer qualification | The seller or broker assesses whether the prospective buyer is a genuine and suitable purchaser. |
| 4. Confidentiality | A confidentiality or non-disclosure agreement may be completed before sensitive business information is released. |
| 5. Further information | The prospective buyer receives more detailed information and may ask questions about the business. |
| 6. Meeting and investigation | The buyer may meet the seller, visit the business and develop a better understanding of the opportunity. |
| 7. Offer | The buyer submits an offer setting out the proposed price and other important terms. |
| 8. Negotiation | The buyer and seller negotiate the price and conditions of the proposed transaction. |
| 9. Sale and Purchase Agreement | The agreed terms are documented in a formal agreement, usually subject to conditions. |
| 10. Due diligence | The buyer and their advisers examine the business and verify relevant information. |
| 11. Unconditional | Once the relevant conditions have been satisfied or waived, the agreement becomes unconditional. |
| 12. Settlement | The transaction is completed in accordance with the agreement and the purchase price is paid. |
| 13. Handover | The business, assets and agreed information are transferred and any agreed owner transition takes place. |
1. The Business Is Offered for Sale
The process starts when the owner decides to put the business on the market.
This may be done privately or with the assistance of a business broker. The business may be advertised on a specialist business-for-sale website, through a broker's buyer network, by direct approaches or through other marketing channels.
The initial advertisement will normally provide enough information to generate interest without necessarily revealing all commercially sensitive details.
Determining who may buy your business and choosing a business broker are separate considerations from the transaction process itself.
2. A Potential Buyer Makes an Enquiry
A buyer sees the opportunity and makes an initial enquiry.
At this point, the buyer may receive basic information such as:
- Type of business
- Location or general region
- Nature of the operation
- Indicative price
- Revenue or profit information where appropriate
- Key features of the opportunity
The amount of information provided at this stage depends on the business and how the sale is being managed.
3. The Buyer Is Qualified
Before significant confidential information is released, the seller or broker may want to establish whether the buyer is a credible prospect.
This can involve discussing:
- The buyer's interest in the business
- Relevant experience
- Funding or finance arrangements
- Ability to purchase the business
- Timeframe
- Other relevant circumstances
The purpose is straightforward: identify genuine potential buyers before disclosing sensitive information or investing significant time in the enquiry.
4. Confidentiality Is Established
Businesses often contain commercially sensitive information that should not be made publicly available.
Before detailed information is released, the buyer may be asked to sign a confidentiality agreement or non-disclosure agreement.
This can help protect information relating to customers, suppliers, pricing, employees, financial performance, systems and other commercially sensitive matters.
Confidentiality arrangements vary between transactions. Your lawyer or broker can advise on the appropriate process.
5. The Buyer Receives More Information
Once confidentiality requirements have been dealt with, the buyer can usually receive more detailed information about the business.
This might include a sales information memorandum, financial summaries, details of assets, operations, premises, staff, customers, suppliers and other relevant information.
The buyer can then decide whether to continue investigating the opportunity.
6. Meetings, Questions and Viewing the Business
If interest continues, the buyer may meet the owner and, where appropriate, visit the business.
This is often where the transaction becomes more personal. The buyer can ask questions, understand how the business operates and assess whether the opportunity fits their objectives.
The seller can also learn more about the potential buyer and their intentions for the business.
Depending on the circumstances, confidentiality may need to be maintained around employees, customers and competitors during this stage.
7. The Buyer Makes an Offer
If the buyer wants to proceed, they may make an offer to purchase the business.
An offer can cover considerably more than just the price.
It may address:
- Purchase price
- Deposit
- Assets included in the sale
- Stock
- Settlement date
- Finance
- Due diligence
- Lease arrangements
- Training and handover
- Other conditions
The structure of an offer will depend on the particular business and transaction.
8. Buyer and Seller Negotiate
The first offer is not necessarily the final deal.
The seller may accept the offer, reject it or negotiate different price or contractual terms.
Negotiations can involve the purchase price as well as conditions, settlement timing, stock, assets, transition arrangements and other matters important to both parties.
Once agreement is reached on the principal terms, the transaction can move into formal documentation.
9. A Sale and Purchase Agreement Is Signed
The agreed transaction is documented in a formal Sale and Purchase Agreement.
The agreement records the terms of the proposed sale and sets out the conditions that need to be met before settlement.
Depending on the transaction, conditions can include matters such as:
- Buyer finance
- Due diligence
- Lease arrangements
- Consent or approval requirements
- Other contractual conditions
The precise agreement and conditions should be determined with appropriate legal advice.
10. The Buyer Carries Out Due Diligence
Due diligence is the buyer's opportunity to check the information and claims relating to the business before completing the purchase.
The buyer may use an accountant, lawyer and other advisers to examine relevant aspects of the business.
Depending on the transaction, this can include reviewing:
- Financial information
- Contracts
- Leases
- Assets
- Employees
- Customers and suppliers
- Legal matters
- Licences and compliance
- Intellectual property
- Other information relevant to the transaction
The purpose is to establish whether the business is substantially as represented and whether the buyer is satisfied with the proposed purchase.
The scope and timing of due diligence can vary significantly between transactions.
11. The Conditions Are Satisfied
If the buyer is satisfied with the due diligence and the other conditions of the Sale and Purchase Agreement have been met or waived, the agreement can become unconditional.
This is an important milestone in the transaction.
However, unconditional does not necessarily mean settlement has already occurred. There may still be steps to complete before ownership and payment are transferred.
12. Settlement Takes Place
Settlement is the point at which the transaction is completed in accordance with the Sale and Purchase Agreement.
The buyer pays the agreed purchase price according to the settlement arrangements and the agreed business assets and ownership interests are transferred.
The lawyers and other professional advisers generally coordinate the formal settlement process.
13. The Business Is Handed Over
After settlement, the practical handover takes place.
Depending on what was agreed, the outgoing owner may:
- Introduce the new owner to key contacts
- Transfer keys, passwords and access information
- Hand over business records
- Transfer relevant online accounts and digital assets
- Explain systems and procedures
- Introduce staff and suppliers
- Provide agreed training or transition support
The extent and duration of any handover should be agreed as part of the transaction.
What Happens If the Sale Doesn't Proceed?
Not every business sale reaches settlement.
A transaction can stop at various points. For example:
- A buyer may decide not to proceed after initial investigation.
- The parties may not agree on price or terms.
- Finance may not be approved.
- Due diligence may identify an issue that cannot be resolved.
- A contractual condition may not be satisfied.
- Either party may decide not to proceed where the agreement allows this.
This is one reason the period between finding a buyer and settlement needs to be managed carefully.
How Long Does a Business Sale Take?
There is no standard timeframe for a business sale in New Zealand.
The overall process can vary according to the business, the number of interested buyers, the complexity of the transaction, finance requirements, due diligence, legal matters and the conditions included in the agreement.
The marketing period may be short or extended, while the transaction itself can take additional time once an offer is accepted.
For sellers, it is important to distinguish between finding a buyer, reaching agreement, becoming unconditional and actually completing settlement.
The Business Sale Process in One Line
List → Enquiry → Qualify → Confidentiality → Information → Meeting → Offer → Negotiate → Agreement → Due Diligence → Unconditional → Settlement → Handover
That is the basic journey a buyer and seller may travel from the first advertisement through to completion of a business sale.
Other NZBizBuySell Resources
This page explains the process. For advice about the individual parts of selling a business, see:
- Selling Your Business – broader advice about selling a business
- The 9 Steps to Selling a Business – a more comprehensive seller-focused guide
- Find a Business Broker – choosing a broker
- Marketing a Business for Sale – promoting the opportunity
- Valuing a Business for Sale – understanding business value
- Business Broker Directory – find business brokers around New Zealand
Frequently Asked Questions
What is the process of selling a business in New Zealand?
The typical process is to offer the business for sale, receive and qualify buyer enquiries, establish confidentiality, provide further information, negotiate an offer, sign a Sale and Purchase Agreement, complete due diligence and other conditions, become unconditional, settle the transaction and complete the handover.
What happens after a buyer makes an offer on a business?
The buyer and seller negotiate the price and terms. If they reach agreement, the terms are recorded in a Sale and Purchase Agreement, usually subject to conditions such as finance or due diligence. Once the relevant conditions are satisfied, the transaction proceeds towards settlement.
What happens during due diligence when buying a business?
The buyer and their advisers examine relevant financial, operational, legal and other information to verify the business and assess whether the agreed conditions can be satisfied. The scope depends on the business and the Sale and Purchase Agreement.
What is the difference between unconditional and settlement?
When an agreement becomes unconditional, the relevant contractual conditions have generally been satisfied or waived. Settlement is the later stage when the transaction is completed in accordance with the agreement, including payment and transfer arrangements.
Does every business sale reach settlement?
No. A transaction can stop before settlement if the parties cannot agree, finance is unavailable, due diligence identifies an unacceptable issue or a condition of the agreement is not satisfied.
How long does the business sales process take?
There is no standard timeframe. The duration depends on factors including buyer demand, the complexity of the business, negotiations, finance, due diligence, legal matters and the conditions of the sale.