New Zealand remains an attractive place to invest due in part to its stable economy and the general ease of doing business. However, transactions with overseas buyers can be complex and often bring their own challenges. We outline some key considerations sellers should consider when transacting with an overseas buyer.

Regulatory and legal

When an overseas buyer is in the mix, New Zealand overseas investment rules are a key consideration. Top of mind where the buyer meets the definition of an “overseas person” (for the purposes of our Overseas Investment Act 2005), will be whether the transaction requires the consent of the Overseas Investment Office and if so, the impacts of this, particularly on timing and cost (see our earlier article for details on the reforms in this area).

Thought should also be given to what licences and approvals may be required, any anti-money laundering compliance hurdles and the tax implications of the deal. When a buyer is less familiar with the New Zealand market, it will likely want to undertake a thorough due diligence process to ensure it understands the regulatory
and legal framework the target business operates in. Sellers should be aware of this and consider what they can helpfully do to streamline the diligence process, including by considering what areas may be of heightened importance (for example, ESG, privacy compliance or intellectual property issues).

An overseas buyer with M&A experience in other jurisdictions is also likely to have different expectations with regards to how the sales process will be run, what the transaction documents will look like and what are considered market terms (and we saw this several times in our 2024 deal activity). For example, a US buyer may expect to draft the sale agreement in which case the style and length of the document is likely to be quite different to what we typically see in New Zealand. They will generally have a greater focus on warranties and indemnities and a different view as to how disclosure against the warranties will work, whether W&I insurance will be taken out and what scope of restraint is appropriate. Adept advisors can greatly assist here by clearly communicating the sales process (including who is expected to prepare first drafts) early in the deal to set expectations, explaining what is market in New Zealand, and negotiating favourable terms for sellers. The choice of governing law, and the processes and jurisdiction for settling disputes, in the sale agreement will
also be key considerations for sellers.  

Financial

As always, sellers should consider the financial stability of the overseas buyer and its ability to pay come settlement day. Surety of payment is more important as it will be harder to chase an offshore party if it does not follow through with the deal. In addition, it is important to consider and deal with any likely exchange rate issues
and how these will be resolved. This will be relevant not only for payment of the settlement amount but potentially also any purchase price adjustments or other deferred purchase price payments. An overseas buyer may use currency hedging to deal with this, or the parties can agree a formula for determining how to calculate
the exchange rate on the relevant date. When settlement occurs may also be influenced by favourable exchange rates, although this will be more difficult for sellers to determine with certainty.

Strategic

There are various strategic considerations which may be of importance to sellers when selling to an overseas buyer, particularly where they are retaining some ownership of, or role in, the business following the sale. Broadly these considerations relate to reputation and relationships.

With respect to reputation, sellers should consider whether the target business’ reputation will be enhanced or diminished. For example, what is the reputation of the buyer and how will the transaction be viewed here? Do the parties share the same values? Will the current branding remain or will be the business be rebranded? Is there potential for the business to grow with exposure to new markets? 

These matters will also impact the target business’ relationships. Sellers should think about how their employees, customers, suppliers and other key stakeholders will react and what impact the sale will likely have on them, positive or negative. Employees in particular are often exposed to changes in management and business practices when there is a change of ownership – these changes need to be carefully managed to ensure employees want to remain with the business and the change is viewed as a positive one.

These strategic considerations will be particularly important where sellers are ‘rolling’ or taking consideration shares in the buyer entity as part of their purchase price. In addition, rolling sellers should undertake due diligence on the overseas buyer to understand its operations and the rights and restrictions attaching to the consideration shares. Rolling sellers should also have a clear understanding of the strategy for the target business following settlement and their role in that strategy.

Cultural

The cultural differences between the parties should also be assessed. This will assist sellers to understand how
their counterparty is likely to want to communicate and negotiate, as well as what their typical business practices are. 

With communication, is more formal language preferred or should the emphasis be on open, informal discussion? Is seniority and who you address important? With negotiations, is your counterparty likely to
prefer a more direct approach or do you need to focus on relationship building? What are your buyer’s business practices – are there any customs (such as gift giving) or protocols (such as how to address people) that you need to be aware of? What are the buyer’s work ethic and values? 

A lack of cultural awareness and sensitivity is likely to lead to general confusion, misunderstandings between the parties and potentially also offense. Conversely, sellers who take the time to familiarise themselves with any cultural differences and respect them throughout the deal will find themselves better able to manage relationships and expectations, ultimately leading to a smoother transaction. Cultural and language differences should also be carefully considered and managed as part of any integration planning.

Practical

Practical matters should not be forgotten by sellers given the impact they often have on deal timeframes. These include:

• Time zones: Time zones will be an important factor to consider throughout the transaction, particularly when arranging calls and meetings. Agreeing how, and how often, the parties (and/or their advisors) need to communicate will help avoid potential delays that may otherwise arise – for example, sellers should consider setting a weekly call at a time that works for all involved to streamline matters and reduce the administrative burden by avoiding the need to find new meeting times each week.
• Timetabling: When transaction timetables are being contemplated, a general buffer should be added for time zone delays as noted above. In addition, the public holidays of each party will need to be factored in, as well as the extra time required if the overseas buyer wishes to undertake site visits or meet management in person. While alternatives are possible (such as video walk-throughs and zoom meetings) some buyers will insist on in-person meetings and sellers need to be prepared for this. As we saw in 2024, time can kill deals where they are left to stall too long.
• Approvals: Often overseas buyers are larger organisations that will require various internal sign-offs before entering into a transaction. These can take time to obtain – for example, where the relevant board only meets monthly. It is helpful for the parties to identify these requirements upfront and make sure the relevant persons will be available when needed.
• Advisors: The New Zealand legal community is relatively small and generally deal advisors – and their preferred style of operating – will be known to one another. This can at times assist with deal negotiations. In contrast, overseas advisors may come with different negotiating styles and different views of what the deal terms should be (particularly depending on what is market in their home country). Sellers and their advisors should encourage the buyer to engage local counsel to assist them and explain what is typical or market here in New Zealand.
• Political landscape: The general political landscape and stability of the buyer’s country should be considered to see whether there is anything that might disrupt the deal. Also relevant will be whether there are any pending legal or regulatory changes that could impact the buyer’s willingness or ability to purchase. As noted in our Overview, 2024 saw geopolitical certainty restored in many countries and sellers would be well advised to understand the current landscape and what it could mean for their sale when considering engaging with overseas buyers.

The prospect of selling a New Zealand business to an overseas buyer presents both opportunities and challenges. With overseas interest expected to continue and even increase in 2025, understanding the key
considerations noted above, and engaging knowledgeable, experienced advisors will help sellers navigate the complexities, maximise the benefits, and ultimately lead to a more successful transaction.