The Key Factors to Consider When Making an Offer to Purchase a Business
17 November 2024

The Key Factors to Consider When Making an Offer to Purchase a Business

Purchasing a business is a significant decision that requires careful consideration and thorough evaluation. Whether you're a seasoned entrepreneur or a first-time buyer, understanding the key factors involved in the process can help you make an informed decision. Here are some of the things to consider when making an offer to purchase a business:


1. What are you purchasing: Assets v share purchase

One of the first decisions you'll need to make is whether to purchase the assets of the business or the shares of the company. An asset purchase involves buying specific assets such as equipment, inventory, and intellectual property, while a share purchase involves buying the shares of the company, effectively taking over the entire business. Each option has its advantages and disadvantages, so it's important to consult with legal and financial advisors to determine the best approach for your situation.


2. Who will be the purchaser: The entity that the business is to operate under

Deciding on the entity that will operate the business is crucial for tax and legal purposes. The entity could be a sole proprietorship, partnership, limited liability company (LLC), or corporation. Each entity type has different implications for GST (Goods and Services Tax) and other tax obligations. It's essential to choose the right entity structure to optimise tax benefits and ensure compliance with regulations.


3. Conduct due diligence on the business

Due diligence is a critical step in the business acquisition process. It involves thoroughly investigating the business to assess its financial health, legal standing, and overall viability. Evaluate the goodwill portion of the purchase, which represents the business's reputation and customer relationships. Additionally, check what plant, fittings, and fixtures are included in the purchase and ensure they are not the property of the landlord or leased under a hire purchase by the vendor.


4. How will you finance the purchase?

Determining how you will finance the purchase is a key consideration. Options include personal savings, bank loans, investor funding, or seller financing. Each financing method has its pros and cons, so it's important to evaluate which option aligns with your financial situation and business goals. Ensure you have a clear plan for securing the necessary funds and managing any associated risks.


5. Assess the employees and key staff

Understanding the existing workforce is crucial when purchasing a business. Identify any key staff members who are essential to the business's operations and consider whether they need to be retained. Assess the overall employee structure, including their roles, salaries, and benefits. Retaining key employees can help ensure a smooth transition and maintain business continuity.


6. Determine vendor warranties

Vendor warranties are assurances provided by the seller regarding the condition and performance of the business. These warranties can cover various aspects, such as financial statements, legal compliance, and the condition of assets. Determine what vendor warranties are required to protect your interests and ensure that the seller is held accountable for any discrepancies or issues that arise post-purchase.


7. Review lease agreements

If the business operates from leased premises, it's important to review the lease agreements. Check the terms and conditions of the lease, including the duration, rent, and any renewal options. If the land is leased, you will need to obtain consent from the landlord to assign the lease to you. Ensure that the lease terms are favourable and align with your business plans.


8. Warranty as to turnover

Having a clear understanding of the business's turnover and financial performance is essential before making an offer. Request detailed financial statements, including profit and loss statements, balance sheets, and cash flow statements. This information will help you assess the business's profitability and make an informed decision about the purchase price.


9. Vendor assist period

A vendor assist period is a specified duration during which the seller agrees to assist you post-settlement. This assistance can include training, introducing you to key clients, and providing operational support. Determine the length and scope of the vendor assist period to ensure a smooth transition and minimise disruptions to the business.


10. Restraint of trade

A restraint of trade clause is designed to prevent the seller from operating a similar business within a certain period and geographic area post-settlement. This clause helps protect your investment by reducing the risk of competition from the seller. Ensure that the restraint of trade terms are clearly defined and enforceable.


By considering these key factors, you can make a well-informed offer to purchase a business and increase your chances of success. Remember to seek professional advice from legal, financial, and business experts to guide you through the process and address any specific concerns.


Article written by Emma Roberts and Georgia Mossman.


Join our Newsletter

Stay tuned

Contact Us

5 July 2026
We're pleased to shine a light on Harry Calcott, a solicitor in our Property Team. If you've worked with Harry Calcott , you'll know he has a knack for making complicated processes feel straightforward. As part of our Property Team, based in our Hastings office, Harry guides clients through some of the biggest moments of their lives, and he brings genuine care to every step of the way. Although, Harry didn't set out to be a property lawyer. The plan, when he graduated with his Bachelor of Law and Commerce, was criminal law. He spent time as a law clerk with the Public Defence Service, a grounding experience that gave him an early look at the realities of legal practice, but somewhere along the way, something shifted. "I realised I was drawn to helping clients through positive milestones rather than difficult disputes," he says. The work of guiding people through important life events, buying a home, planning for the future, felt more like where he was meant to be. His commerce background turned out to complement property law naturally, and what might have looked like a change of direction began to feel inevitable. Sometimes the path surprises you. For Harry, one of the most rewarding parts of the job is sitting across the table from a first home buyer. He knows the process can feel overwhelming, and he's deliberate about making it feel anything but. "I try to provide as much information and reassurance as possible to make the process straightforward and stress free." What keeps it meaningful, he says, is the people themselves, the excitement and optimism that first home buyers bring with them is something that never gets old. "It's a privilege to be part of such an important milestone in their lives." Harry made the move from Wellington to Hawke's Bay to join the Willis Legal team, and by the sound of it, he's settled in well. If you're visiting him in the region, he'll take you to Sutto for the eggs benedict or Kami for sushi, then walk you around Windsor Park. It's a low-key itinerary that suits him; good food, fresh air, no fuss. The weekends follow a similar pattern. Good food, sport, time outdoors when the weather allows, and getting organised for the week ahead, plus the odd trip back to Wellington to visit friends and family. For someone who spends his working days helping clients prepare for the moments that matter most, a little structure away from the office clearly goes a long way. Harry is a solicitor at Willis Legal. If you're buying your first home, planning for the future, or simply want someone in your corner who'll make the process feel manageable, get in touch with us today.
2 July 2026
People often get confused by the way we lawyers speak. Part of our job is to communicate with you in a way you understand, not to sound smarter than we are. We try our best to break it down in a way that you can understand, but sometimes we can’t avoid it, especially when the jargon comes from a contract, legislation, or Land Information New Zealand requirements. Knowing what these terms mean is important to ensure that you understand your options and rights, a deadline is not missed, or you do not walk out of a meeting expecting a different outcome. It does not help that some of our jargon is different to America and what you see on television. I asked my friends and family what terms they hear me using and think “I have no idea what you are on about”, and I have collated them and translated them. These are just a few examples. Contact one of our esteemed legal professionals if you have any other specific questions for a breakdown. Legal jargon and their translation Client The individual or entity receiving legal advice or representation. Solicitor/Barrister A person who has completed the educational qualifications and character requirements to be admitted to the “bar and holds a practising certificate”. Generally referred to as a lawyer. In New Zealand, unlike in some other countries, all solicitors are also barristers. Caveat A formal notice lodged on a property title to protect your interest in the property. It acts like a flag on the property title, preventing the registered owner from doing anything with the property until the caveat is removed. Intestate When someone dies without leaving a valid will. Memorandum A formal written document that is filed in court proceedings, used to talk to a judge, generally setting out your position or proposed next steps. Often referred to as a memo. Probate The legal process of obtaining a grant from the High Court of New Zealand to allow the executor to administer the deceased's will. This application is only required if the deceased has one asset valued at more than $40,000. Attorney A person you appoint to make decisions and/or manage your property on your behalf. This can either be from the date you sign your Enduring Power of Attorney documents or come into force once you lose capacity. In America, an attorney is a qualified lawyer. Executor The person named in a will who is responsible for administering and distributing the estate. Deed A formal written document that is signed and witnessed in a particular format. A Deed, unlike a contract, does not require each party to give or promise something in return(consideration). Common types are a Deed of Trust or a Deed of Lease. Affidavit Your written statement of facts is used as your evidence in legal proceedings. By signing, you swear (on the bible) or affirm (make a solemn declaration) that the contents are true. Purchaser The party buying the goods or services from another party. Vendor The party selling the goods or services to another party. Tenants In Common A way for two or more people to own property together in defined shares. Record of Title The land record that proves ownership of land and the rights and restrictions that apply to the land. Chattels Moveable items of personal property. Things you can pick up and take with you. Conveyancing The legal process of transferring property ownership from a seller to a buyer. Counsel The lawyer providing the legal advice and representation in court. Covenant A legally binding agreement against your property title that dictates how you can use, develop, or maintain your land. Disclosure The legal obligation to provide all relevant information and documents to another party.
26 June 2026
If you manage a rental, there’s a date worth marking. As of 29 June 2026, bond transactions will go digital and paper forms will be phased out. This follows Tenancy Services’ announcement that after this date, they will be moving remaining bond transactions online through their portal ‘ Bond Hub ’. What’s changing? Refunds Change of tenant Change of landlord Viewing/updating your details Registration of bonds moved online in December 2025, paving the way for these other services to follow. The benefits of these changes Faster - Once all parties agree, transactions can be processed straight away Simpler - No paperwork or manual handling More reliable - Fewer errors and delays, with easier fixes More transparent - Track progress in real time Instead of waiting weeks for a posted paper refund form, or out of date contact details affecting slow communications, tenancy transactions can be processed quickly online. Both parties can keep a record of bond transactions. For example, tenants decide to move out, and you are asked for a bond refund. You can complete this process online as agreed, and the money is released quickly, making for a seamless transaction. This will help landlords in those hurried weeks where tenants move out to get everything sorted. When processing a bond refund, it would be sensible to agree on a bond refund amount before lodging to avoid creating extra work for yourself. Tenancy Services won’t be processing bulk change of landlord requests going forward. These will need to be registered individually through their self-service function on Bond Hub or your property management software if it supports this. You will need to get registered with Bond Hub if you haven’t already and familiarise yourself with the changes. You may already be using existing property management software with refund functionality built into its system and wondering how these services will interact. It would be sensible to discuss this with your current property management software provider to understand what these changes mean for you. What you should do now Register for Bond Hub Review how you are currently communicating with your tenants Complete bond transactions through Bond Hub going forward What to tell your tenants Register for Bond Hub Communicate that bond transactions will be completed through Bond Hub going forward Encourage tenants to keep their email addresses and phone numbers up to date on Bond Hub Ask tenants to keep their tenant number somewhere safe In the Hawke’s Bay, we know many local landlords handle their tenancies themselves. These changes will have great benefits for you. Getting set up early will help avoid a chaotic few weeks after 29 June 2026. As with any changes, there’ll be a learning curve. However, the process should be more streamlined once you’re set up. Our team are happy to guide landlords through the new tenancy processes. If you have any questions regarding your obligations as a landlord, we’re here to help.
Show More