Buying a Business in NZ: The Financial Checks and Protection You Need (2026)

A 2026 guide to buying a business in New Zealand: the financial due diligence to do before you sign, how to sanity-check the numbers, and the key-person, ACC and income protection cover you should have in place from day one.

Buying a business is one of the larger financial decisions many people make, and most of the attention goes into the purchase itself, the price, the lawyer, the loan. The part that gets left until later is what happens once you own it. You are now the person the business depends on, often the main earner, and frequently carrying debt against the deal. This guide walks through the financial checks worth doing before you sign, and the protection worth having in place the day you take over.

TL;DR: Before you buy, work through the financials, the valuation and the contracts. From day one, look at four protections: key-person cover, ACC CoverPlus Extra (which can pay 100% of an agreed amount rather than up to 80% of past income⁵), private income protection for the illness ACC does not cover⁶, and your own KiwiSaver, since the self-employed get no employer contribution.³

This article is general information only and is not personalised financial advice. It does not take into account your particular financial situation, goals or needs. Before acting, consider whether it's right for you and seek advice tailored to your circumstances.

What financial due diligence should you do before buying a business?

Due diligence is the process of checking that the business is what the seller says it is. Most buyers do this with an accountant and a lawyer, and that is the right team. Your job is to know what you are looking for so nothing important gets skipped.

The core financial checks include:

• Three to five years of financial statements, read alongside the IRD returns and GST records, not just the version prepared for the sale.
• Bank statements to confirm the revenue actually landed and matches the accounts.
• A breakdown of revenue by customer or contract. If one or two clients make up most of the income, that is a concentration risk you need to price in.
• Add-backs, the expenses the seller says are personal or one-off. These lift the stated profit, so each one needs to be genuine and verifiable.
• Aged debtors and creditors, so you know what is owed to the business and what it owes.
• Staff and contractor agreements, including any liabilities you would inherit (holiday pay, redundancy, KiwiSaver obligations).
• Leases, supplier contracts and key customer agreements, and whether they transfer on sale or have to be renegotiated.

New Zealand is largely a country of small businesses, so most people buying in are buying a small operation. Around 97% of New Zealand enterprises have fewer than 20 employees, and the majority have no employees at all.⁸ In a business that size, the numbers can rest heavily on the owner, which is exactly why the protection side matters as much as the spreadsheet.

How do you value a business and check the numbers stack up?

Valuation is not an exact science, and a price is only ever what a buyer and seller agree. That said, there are common ways to sanity-check whether the asking figure is reasonable.

Most small-business valuations come down to a multiple of normalised earnings, often expressed as a multiple of EBITDA (earnings before interest, tax, depreciation and amortisation) or of seller's discretionary earnings. The multiple reflects risk: a business with steady contracts, low owner-dependence and good systems tends to attract a higher multiple than one that lives or dies on the current owner's relationships.

Things worth weighing up when you look at a valuation:

• Is the profit normalised? Add-backs should be removed, and a fair market salary for the owner's role should be deducted. If you are buying a job, the wage you would pay yourself is a real cost.
• How transferable is the goodwill? If customers buy because of the seller personally, some of that value may walk out the door with them.
• What does the debt cost? Run the purchase through a finance lens: after loan repayments and your own wage, is there a genuine return left?
• What is included? Confirm whether plant, stock, vehicles and intellectual property are in the price or on top.

This is accounting, tax and legal territory, and Smiths Financial does not provide advice on business valuation, tax structuring or the purchase agreement. This is general information only. Please consult an appropriately authorised accountant and lawyer. Where we can help is the part that sits alongside the deal, protecting the income and the people the business now relies on.

What protection do you need the day you take over?

Once the sale settles, the risk profile changes. The business depends on you, you may have borrowed to buy it, and if you stop earning, both your household and the loan are exposed. Four protections are worth reviewing from the outset.

Source: Smiths Financial. Whether a claim is paid depends on the terms, conditions, exclusions, stand-down periods and underwriting of the specific policy, and on your disclosure. This is a summary only — always read the policy wording / product disclosure statement.

None of these is compulsory, and the right mix depends entirely on your situation, your debt, your dependants and the existing cover you hold. Personalised advice works through what fits you.

Why does key-person cover matter if you're now the key person?

In a small business the owner often is the business, the main relationship-holder, the technician, the person who knows how everything works. Key-person cover is insurance the business takes out on the life and health of a person it depends on, so that if that person dies or is unable to work, money is available to keep things going, repay debt, or buy time to find a replacement.

For a newly purchased business, this is worth thinking about on two levels. There is the household level, your family's income if something happens to you. And there is the business level, the loan you took out to buy the business, supplier relationships, and staff wages that still have to be paid while the business adjusts.

If you bought into the business with a partner or co-owner, there is a further layer: what happens to the ownership if one of you dies or becomes seriously unwell. That is the territory of shareholder protection and a buy-sell agreement, funded by insurance, so the surviving owner can buy out the departing owner's share without a fire sale. Our guide to shareholder protection and buy-sell agreement funding covers how that is structured.

Cover depends on the policy terms, exclusions, stand-down periods, underwriting and your disclosure, so the wording matters. As an independent adviser, Smiths can compare key-person and life cover across the major New Zealand insurers, Partners Life, AIA, Asteron, Fidelity, Chubb and Cigna among them, rather than working from a single provider.

How should a new owner set up ACC CoverPlus Extra?

If you become self-employed or a shareholder-employee when you buy the business, ACC will put you on standard CoverPlus by default. CoverPlus pays weekly compensation of up to 80% of your previous year's liable income, worked out at claim time.⁵ For a brand-new owner that is a problem: you may have little or no relevant filed income yet, and the business is still settling.

ACC CoverPlus Extra (CPX) is the optional alternative. You agree a fixed level of cover up front, anywhere between the minimum and maximum for the levy year, and on the full-compensation option ACC pays 100% of that agreed amount (minus tax) if injury stops you working, until you can return to full-time work, with no need to prove your income at claim time.⁴⁵

The agreed-cover bands for the current and coming levy years are:

Source: ACC CoverPlus Extra, current as at 14 May 2026. Figures are set by ACC and change each levy year.

For someone who has just taken on a business loan, the certainty of an agreed amount usually beats default cover based on a thin or non-existent prior year. Our deeper comparison of CoverPlus vs CoverPlus Extra for the self-employed walks through how to choose.

A few limits to plan around. ACC covers injury and accident only, not illness, and weekly compensation is capped by a maximum liable earnings threshold, set at $152,790 for the 1 April 2025 to 31 March 2026 levy year.⁶ Payments for a single long-term injury are also limited to a maximum of two years per claim from when they start; after that, payments stop and you receive only NZ Superannuation if you are eligible.⁷ Those two limits, illness and the two-year cap, are the main reasons owners pair ACC with private cover.

What happens to your income and mortgage if you can't work?

This is the question that catches new owners out, because ACC only deals with part of it. ACC covers injury, but not illness, no cancer, no cardiac event, no degenerative condition, no mental-health condition that stops you working.⁶ For most people, illness is the more likely reason they end up off work for a long period, and a business loan does not pause while you recover.

Private income protection is the cover designed for this. It pays a monthly benefit if illness or injury stops you working, and it can be structured to sit alongside your ACC cover so you are not paying twice for accidents. Whether a claim is paid depends on the policy terms, exclusions, stand-down (wait) periods, underwriting and your disclosure, so the detail of the wording matters as much as the headline benefit.

A new owner with a mortgage on the home, a loan against the business, or both, has more riding on continuous income than most employees do. Factors that influence how much cover people in this situation consider include their income, the size of the business and home debt, dependants, and the ACC cover already in place. The point of an income protection review is to line all of that up so the cover fits the obligations you have actually taken on. The self-employed financial checklist brings the ACC, insurance and KiwiSaver pieces together.

Don't forget your own KiwiSaver and retirement as an owner

When you stop being an employee, you stop getting an employer KiwiSaver contribution. The self-employed receive no employer contribution at all, so retirement saving becomes something you have to fund deliberately rather than something that happens automatically out of each pay.³

Two things are worth knowing.

First, you can still receive the government contribution by paying into your KiwiSaver scheme directly. From 1 July 2025 the government contribution is 25 cents per $1 you contribute, up to a maximum of $260.72 per year (down from $521.43 before that date), and to get the full amount you need to contribute at least $1,042.86 in the 1 July to 30 June year and earn $180,000 or under.²³

Second, if you keep paying yourself a salary through the company and remain a salaried employee, you and the company contribute as employee and employer. The minimum employee and employer KiwiSaver contribution rate rose to 3.5% each from 1 April 2026, and is set to rise again to 4% each on 1 April 2028.¹

Source: Inland Revenue, current as at 14 May 2026. KiwiSaver is a long-term savings scheme. Government contributions, contribution rates, withdrawal rules and tax (PIR) settings are set by the Government and can change. Figures are correct as at 14 May 2026. Check current rules at ird.govt.nz, kiwisaver.govt.nz and sorted.org.nz, and the relevant scheme's Product Disclosure Statement.

It is common for owners to treat the business itself as the retirement plan, intending to sell it one day. That can work, but a sale is not guaranteed, and the price is not certain, so many owners choose to keep building KiwiSaver alongside the business rather than relying on the exit alone. Returns are not guaranteed. The value of investments can go down as well as up and you may get back less than you invested. Past performance is not a reliable indicator of future performance. Our guide on business exit vs KiwiSaver for retirement weighs the two up.

Who should be on your advice team?

Buying a business is a team sport, and no single adviser covers the whole field. A sensible line-up looks like this:

• An accountant for due diligence, the financial statements, tax structure and valuation sense-check.
• A commercial lawyer for the sale and purchase agreement, leases, contracts and warranties.
• A bank or mortgage adviser for the lending, since Smiths Financial does not provide mortgage advice; please consult an appropriately authorised professional.
• A financial adviser for the protection side, key-person cover, ACC CoverPlus Extra settings, income protection, and your own KiwiSaver.

Each of these professionals is generally paid differently, and it is worth understanding how. For the insurance and KiwiSaver work, we're generally paid by commission from the insurer or provider when you take out a policy or product through us; this doesn't change the premium or price you pay. Some arrangements may involve a fee, which we agree with you first. We manage any conflicts of interest in line with our duty to prioritise your interests, with full details in our Disclosure. We work with a panel of selected insurers and providers, listed in our disclosure, rather than every product in the market.

Frequently asked questions

What financial due diligence should I do before buying a small business in NZ? Work through three to five years of financial statements against the IRD and GST records, confirm revenue through bank statements, check revenue concentration by customer, verify any add-backs, review debtors and creditors, and read the staff, lease and supplier contracts to see what transfers on sale. An accountant and a commercial lawyer should lead this work.

Do I need key-person insurance when I buy a business? Many owners of small, owner-dependent businesses consider it, because the business often relies heavily on one person. It can provide funds to repay debt, keep the business running, or buy time to replace a key individual if they die or can't work. Whether it suits you, and how much, depends on your debt, your role and your existing cover. Personalised advice works through what fits.

Should a new business owner be on ACC CoverPlus or CoverPlus Extra? It depends on your situation. CoverPlus pays up to 80% of your previous year's income at claim time, which can be thin for a brand-new owner, while CoverPlus Extra lets you agree a fixed amount up front and, on the full-compensation option, pays 100% of it for injury.⁵ For owners with new businesses or variable income, CPX often gives more certainty, but both cover injury only, not illness.⁶

Does ACC cover me if illness stops me running the business? No. ACC weekly compensation covers injury and accident only, not illness.⁶ That is why many owners pair ACC with private income protection, which can be structured to pay a monthly benefit when illness or injury stops you working, subject to the policy terms.

What happens to my KiwiSaver when I become self-employed? You stop receiving employer contributions, the self-employed get none.³ You can still get the government contribution, up to $260.72 a year, by paying into your scheme directly.² Many owners keep contributing deliberately so their retirement does not depend solely on selling the business one day.

To get advice tailored to your circumstances, book a conversation.

This article is general information only and is not personalised financial advice. It does not take into account your particular financial situation, goals or needs. Before acting, consider whether it's right for you and seek advice tailored to your circumstances. Craig Smith Business Services Ltd (FSP712931), trading as Smiths Financial, holds a Class 2 licence issued by the Financial Markets Authority to provide financial advice on personal risk insurance, health insurance, general insurance, KiwiSaver and managed funds, and is a member of the Financial Dispute Resolution Service (FDRS), a free and independent dispute resolution scheme. Written by Henry Smith, Financial Adviser; reviewed by Craig Smith, Principal Adviser. Last reviewed 14 May 2026.