August 11, 2026

Selling a business in NZ: valuation and tax, explained

BusinessTax

Selling a business involves more than agreeing on a price. This guide explains how buyers value a business, how the sale structure affects tax, and what to consider when selling shares, assets, goodwill and other parts of the business.

Turnover is probably a number you keep a close eye on. But when you’re selling, turnover isn’t what tells you what the business is worth. That gap between turnover and value is where selling a business in NZ really starts. Buyers look at the profit, the risks in the business, and the future earnings they expect from it.

Selling a business in NZ also changes your tax position, and usually not in the way owners expect. Tax isn’t worked out on the total amount the buyer pays. You allocate the sale price across the different parts of the business, and each part can be taxed differently.

Quick summary

Three things decide your result when selling a business in NZ: the sale price, the deal structure, and what’s taxable. Buyers usually value a business on a multiple of its profit. Heavy owner reliance pulls that multiple down.

New Zealand doesn’t have a general capital gains tax, so the sale of business goodwill is usually tax-free. But there are exceptions. Tax may still turn up in a few places. Your stock on hand is one. So is any payment for agreeing not to compete, called a restraint of trade. Depreciation you’ve already claimed on plant and equipment may also see its share of tax.

The tax on selling a business in NZ also shifts with the structure. You either sell the shares or the business assets. That affects buyers and sellers differently. Settle the deal structure before you agree on a price.

Buyers pay for profit, not turnover

A business valuation in NZ usually starts with a multiple of profit to a working owner. You adjust the net profit to show what the business would earn under one full-time owner-operator. You add back an above-market owner’s salary, one-off costs, and personal expenses run through the business.

On larger deals, you’ll probably hear people talk in EBITDA multiples. It’s just an acronym for earnings before interest, tax, depreciation and amortisation. Whatever the case, aiming for a profit sets the price. That’s how buyers value most small businesses at this side of the market. Chartered Accountants ANZ sets out the full range of valuation approaches.

The multiple reflects risk. Steady cash flow, contracted revenue and a good spread of customers all help. But if two or three customers make up most of your revenue, prospective buyers will price that risk in.

Selling a small business in NZ also often comes down to how well it runs without you. Potential buyers need to see where the profit actually comes from. A business for sale with clean records and documented systems attracts a wider buyer pool. Buyers also look at who owns the customer relationships. If that’s mostly you, they’ll wonder how many customers will stay or go once you leave. You can usually work on that, but it takes a year or two.

Take, for example, a Te Puke engineering business earning $400,000 to a working owner. Clean accounts, documented systems and 40 spread customers might attract a solid multiple. The same profit from two customers, with you quoting every job, will attract far less.

Most advice on how to sell a business covers preparing a business for sale and finding a business broker.

For more on getting ready to sell, read our free resource on three ways to sell your business for more. If a staged sale appeals to you, read our one way to sell your business.

The tax rules don’t treat every part of the sale the same way

New Zealand doesn’t have a general capital gains tax. Inland Revenue treats personal and business goodwill as non-taxable capital assets.

You then allocate the sale price across the business assets. The tax treatment follows what each asset is.

Two areas deserve close attention:

If trading stock is sold for more than its cost then that can cause taxable income.
Sell plant above its tax value, and you claw back past deductions as income.

Since 1 July 2021, deals over $1 million need an agreed allocation between the parties. If you and the buyer can’t agree, you can set the allocation yourself within three months of settlement. The buyer then gets another three months to set theirs if you as the vendor haven’t done it in your three months. It’s a good idea to agree the split in the sale and purchase agreement before you sign.

GST is the other one to watch. A sale can be zero-rated as a going concern, but only if you meet every condition:

You and the buyer are both GST registered.
The sale includes everything the buyer needs to keep trading.
You record the going concern agreement in writing.
Both of you intend the buyer to carry on the activity.
The business is still running at the time of supply.

Selling shares and selling assets product different tax outcomes

A share sale transfers the company itself, along with its history and its liabilities. An asset sale works differently. The buyer takes the specific business assets listed in the agreement rather than the company. Inland Revenue sets out the mechanics of setting up an asset sale for both sides.

	Share sale	Asset sale
What changes hands	The company, including its history	The listed business assets and goodwill
Existing liabilities	Follow the company to the buyer	Generally stay with the seller
Tax value of assets	Carries over unchanged	Resets for the buyer
Usually preferred by	Sellers	Buyers
Due diligence	Deeper, covers company history	Narrower, focused on the assets

Buyers often prefer an asset sale. It leaves the company’s old liabilities behind and resets the tax value of the business assets. Sellers often prefer a share sale because the tax result is usually better.

Share sales also mean deeper due diligence. Buyers will work through your financial statements, tax returns and contracts in detail. If they can’t get comfortable on a risk, expect warranties, a holdback or a lower price.

Keep in mind that shares or assets, when buying a business, look at the same decision from the buyer’s side.

Earnouts and vendor finance help when you can’t agree on price

Sometimes you agree on everything except the final number. An earnout or vendor finance can bridge that gap, and both are common in owner-operated deals.

An earnout ties part of the price to how the business performs after settlement. Vendor finance means you lend the buyer part of the price, and they repay it over an agreed term. Both usually run one to three years. Both also leave you carrying risk of not having the settlement amount after the sale.

The tax follows what the payment is for. Inland Revenue treats an earnout based on future performance as income when you receive it. If the payments are simply the sale price in installments, the treatment follows your allocation.

Deferred payments can also trigger the financial arrangements rules. Those rules change when you recognise the income across the term.

Frequently asked questions

What do you need to consider when selling a business in NZ?

Your result depends on three things: the valuation, the deal structure, and which parts of the price are taxed. Goodwill is usually tax-free. Trading stock, restraint of trade payments, and recovered depreciation are not.

How much is my business worth in NZ?

Most buyers start with a multiple of the profit available to a working owner. The multiple reflects risk: customer spread, cash flow, and how much the business depends on you.

Is goodwill taxable when selling a business in NZ?

Usually not. Inland Revenue treats personal and business goodwill as non-taxable capital assets. Goodwill tied to your premises, lease or sub-lease is the exception. That part is usually taxable.

What tax do you pay when selling a business in NZ?

There’s no general capital gains tax, but parts of the sale are taxable. The tax on selling a business in NZ can cover trading stock and restraint of trade payments. It also catches depreciation you recover on plant sold above its tax value.

Should you sell the shares or the assets?

There’s no single answer that fits every sale. Buyers often prefer assets. They avoid the company’s existing liabilities and reset the tax value of what they buy. Sellers often prefer shares.

Decide your approach early. It shapes the negotiation and the tax position on both sides.

How is an earnout taxed in NZ?

It depends on what the money’s actually for. An earnout tied to how the business performs counts as income in the year you receive it. Instalments work differently. If the buyer’s simply paying the agreed sale price over time, the tax follows your original allocation.

Think about the tax before you sell

By settlement, the decisions that matter are already made. The valuation, the assets you include, and the shares-versus-assets call all shape your final figure.

The business sale process in NZ works best when you plan for it over the long term. If you’re thinking about selling in the next one to three years, it’s better to start the conversation now. That gives you time to tidy your financial statements and tax returns. You can then fix problems before you negotiate.

A practical run-up looks like this:

When	What to work on
24 to 36 months out	Clean up the accounts, spread the customer base, document how the work gets done
12 to 24 months out	Review your structure and tax position, and fix anything that would show up in due diligence
6 to 12 months out	Agree your valuation range, choose shares or assets, brief your broker and lawyer
At the deal	Settle the allocation in the sale and purchase agreement before you sign

Ingham Mora is the Western Bay of Plenty’s leading independent chartered accounting firm. We work with business owners from Katikati to Te Puke on succession and tax planning.

Thinking about selling in the next one to three years? The earlier you talk about it, the more we can do to work out a feasible sale price. But if you’re looking to buy instead, our guide for buyers can give you a head start.

For a more in-depth and personalised look into buying or selling, booking your first free chat with our team will cost you nothing. No commitment, no pressure – just an opportunity to help sort things out.