Everything an owner needs to know — from readiness to settlement — with indicative multiples and the factors that actually move price.
By Aaron Toresen, Rockfield Business Brokers
Most New Zealand business owners sell once. They spend twenty or thirty years building something, and then navigate the single most consequential financial transaction of their working life with no prior experience, often under time pressure, and frequently advised by whoever happens to be nearest.
The results show it. Businesses sell for less than they should, or don't sell at all. Deals collapse in due diligence after months of work. Owners discover — too late — that the thing they thought they were selling isn't what a buyer is willing to pay for.
It doesn't have to go that way. Selling well is not luck; it's preparation, sequencing and evidence. This guide walks through the whole arc: whether your business is ready, what it's actually worth, how to prepare it, how the sale process runs, how deals are structured, and where they tend to fall over. It's written for owners of established New Zealand businesses — roughly the $1M to $20M revenue range — but the principles scale up and down.
It's long, because doing this properly is not a five-minute exercise. Save it, and come back to the sections you need.
Part 1 — Is your business ready (and are you)?
Before value, before process, there's a prior question most owners skip: can this business be sold, and in what condition?
The single biggest determinant is owner-dependency. If the business stops when you stop — if the relationships, the quoting, the knowledge and the decisions all run through you — then a buyer isn't purchasing a business. They're purchasing a job, with all the risk that the value walks out the door on settlement day. That perception discounts your price, increasing the likelihood a buyer will want a lengthy earn-out that ties you in, or removes whole groups of buyer who can't run it themselves.
The honest test: could you step away for a month — a real holiday, no daily phone calls — and return to a business that ran without you? If yes, you have a genuinely saleable asset. If no, that's the first and most valuable project to tackle, and it's covered in the roadmap below.
There's also a personal readiness question. What does a good outcome look like for you — a clean exit, a staged handover, leaving some equity in, staying on for a period? Do you have a plan for the capital and for what comes next? Owners who haven't answered these tend to hesitate at the critical moment and lose deals. Clarity on your own goals is part of being ready.
Part 2 — What is it actually worth?
"What's it worth?" is the first question every owner asks, and the honest answer is: it depends on the buyer, the method, and how well the numbers are presented. Here's how professional valuations are actually built.
The methods
EBITDA multiple — for most established businesses with roughly $500k or more in earnings, value is expressed as a multiple of EBITDA (earnings before interest, tax, depreciation and amortisation), adjusted for one-offs and owner-related add-backs. This is the default method.
Seller's Discretionary Earnings (SDE) — for smaller, owner-operated businesses where the owner is genuinely the engine, value is expressed as a multiple of SDE: EBITDA plus a full owner's salary plus owner-related benefits. SDE multiples look lower than EBITDA multiples because they're applied to a larger earnings base; calculated honestly, the two usually arrive in the same neighbourhood.
Asset-based — where real value sits in plant, vehicles, inventory or freehold premises, valuation starts from the value of those assets with goodwill added if the business is profitable. For most service and trade businesses this is a floor, not the answer.
Discounted cash flow (DCF) — projects future cash flows and discounts them to present value. Rigorous in theory, but for SMEs the assumptions swing the answer too much to rely on alone. It earns its place on larger deals, long contracted revenue streams, and shareholder disputes.
Market comparables — what have similar businesses actually sold for? This is the discipline that keeps every other method honest. A multiple is real not because a textbook says so, but because real buyers recently paid it for similar businesses.
Indicative multiples for NZ SMEs
The ranges below are indicative market bands commonly seen across the New Zealand SME market — a starting point for orientation, not a valuation. Real multiples are driven by the specifics of the individual business far more than by its sector. Treat these as the rough gravity, not the answer.
| Business profile | Typical basis | Indicative range |
|---|---|---|
| Micro / owner-operated (owner is the business) | SDE | ~1.5× – 3.0× |
| Small established ($500k–$1M earnings) | EBITDA | ~2.5× – 4.0× |
| Mid-sized ($1M–$3M+ earnings) | EBITDA | ~3.5× – 5.0× |
| Low-dependency, recurring-revenue, or strong-growth | EBITDA | 5.0×+ |
Broad sector tendencies within those bands: professional services and recurring-revenue or software businesses tend to sit higher; trades and hospitality tend lower; manufacturing and distribution tend to sit in the middle. But a well-run, low-dependency trades business will beat a fragile professional-services firm every time — the profile matters more than the label.
What businesses actually sold for: our own numbers
Forget the textbook bands for a moment. Here is what we see in practice, drawn from the transactions our team has taken to market — a book of around 60 completed sales of established New Zealand businesses between $1.5m and $20m in Enterprise value.
Across those deals, the median sale price landed at 3.6× EBITDA, with the full range running from roughly 2.6× to 5.3×. By the sectors where we have enough transactions for the number to mean something:
| Sector | Transactions | Median multiple | Range |
|---|---|---|---|
| Manufacturing | 27 | 3.7× EBITDA | 2.6× – 5.3× |
| Import & Distribution | 16 | 3.8× EBITDA | 2.7× – 5.3× |
| Services | 6 | 3.5× EBITDA | 3.0× – 3.8× |
Smaller samples in construction, IT, logistics, engineering and a handful of other sectors sat broadly within the same 3–5× band, but with only one to three deals each we treat those as anecdote, not evidence — the spread within a sector is wider than the gap between sectors, which is exactly the point: the profile of the business matters more than its industry label.
The half-turn that owner-independence is worth
This is the single most important pattern in our data, and it confirms what the earlier sections argue.
Where we recorded whether a business could run without its owner, the businesses that were genuinely fully managed — owner-independent — sold at a median of 3.8× EBITDA. The businesses that still depended on the owner sold at a median of 3.3×.
That half-turn gap is not abstract. On a business earning $1 million of EBITDA, half a turn is $500,000 of sale price — the difference between the owner who spent a year building a second layer of management and the one who didn't. It is the highest-return work available to most owners preparing to sell, and our own deal book prices it almost exactly at the difference described in Part 1.
Competition pays, too
The other clear pattern: a properly run, competitive process lifts the number. Deals that attracted three or more offers achieved a median 3.8×, against 3.5× where only a single buyer was at the table. Confidentiality doesn't mean a quiet, one-buyer sale — across these transactions a typical campaign had dozens of qualified buyers sign confidentiality agreements to look closer, and well over half of the businesses sold at or above their asking price. Interest, held under proper confidentiality and brought to the table together, is what creates the tension that moves price.
A note on this data: these figures are drawn from our team's own completed transactions and are aggregated so that no individual sale can be identified. They describe our experience across this book of deals, not a market-wide index — sample sizes are stated so you can weigh each number accordingly. Every business is different, and past transactions are a guide, not a guarantee.
What moves the multiple
Two businesses with identical earnings routinely sell for very different prices. The difference is these factors:
- Owner dependency — the less the business needs you, the higher the multiple.
- Recurring revenue — contracts and subscriptions are worth more than one-off jobs.
- Customer concentration — one customer above 25% of revenue compresses the multiple; above 40%, it can halve it or make the sale very difficult.
- Growth trend — three years rising beats three years flat.
- Earnings quality — clean, verifiable, well-documented numbers beat a defensible-but-messy P&L.
- Size — larger earnings generally attract higher multiples, all else equal.
When you need a formal valuation
For an indicative sale range, a market appraisal based on real comparables is the right tool. But for bank funding, shareholder buy-outs, relationship property, estate work or court proceedings, you need an AES2 Standard Valuation — the formal standard set by Chartered Accountants Australia and New Zealand, accepted by banks, accountants, lawyers and the courts. If money or independence is on the line, do it once and do it properly.
Part 3 — The 12-month preparation roadmap
The owners who achieve the best outcomes give themselves a runway — usually around twelve months — to tidy the things that quietly erode value and surface the strengths that don't yet show up in a P&L. Here's the sequence.
Months 12–9: get the numbers right. Buyers and their accountants will study three full years of financials. Reconcile and tidy the chart of accounts so categories mean something. Separate personal spending from business — vehicles, travel, subscriptions, family wages — and either remove them or document them clearly as add-backs. Normalise owner remuneration to a market salary for the role you actually perform. Document one-offs (a COVID-era support payment, an insurance payout, a legal settlement) so they don't distort the trend. The goal is a clean, defensible EBITDA a buyer's accountant can verify in an afternoon, not argue with for a month.
Months 9–6: reduce owner dependency. Start handing over key customer relationships, quoting and pricing decisions, supplier negotiations, hiring and rostering. The four-week-holiday test is the measure.
Months 6–4: contracts, IP and the lease. Confirm supplier pricing, exclusivity and change-of-control clauses. Put every team member on a current written employment agreement, with restraints where appropriate. Make sure intellectual property — trade marks, domains, software licences, custom code — is owned by the company, not by you personally or a former contractor. And check the lease: buyers want to see at least the deal length plus options, so a short tail on the lease is a problem to renegotiate early. A buyer pays for what they can keep; anything that walks out the door with you isn't part of the sale.
Months 4–2: the operational story. Prove the business is a system, not a personality. A simple org chart, documented procedures for the work that drives revenue, a current employee handbook, up-to-date health-and-safety records, and a financial dashboard the new owner can run from day one. Not a corporate operations manual — just enough that a competent buyer can see the wiring.
Months 2–0: the Information Memorandum. The IM is the document a buyer reads before they meet you. A strong one tells the story of the business, presents three years of clean financials with clearly explained add-backs, and frames the opportunity for the next owner. A weak IM forces buyers to do the imaginative work themselves; a strong one frames the business at its true value and filters out the time-wasters.
Part 4 — When you're more than a year out: building a value bridge
The roadmap above is preparation — tidying and de-risking a business that's already close to sale-ready. But some owners are in a different position. If you're two, three or five years from selling, and especially if the business is still heavily owner-dependent or underperforming its potential, the opportunity isn't to prepare value — it's to build it. Our own data puts a number on the prize: recall that owner-independent businesses in our book sold at a median 3.8× against 3.3× for owner-dependent ones. On $1M of EBITDA, deliberately closing that gap is worth around half a million dollars. That is not tidying. That is a project.
Doing it well is not something most owners can improvise, because the person running the business every day is the worst-placed to see objectively where value leaks and what a buyer will actually reward. Building real value ahead of a sale takes three things done properly.
A formal baseline valuation. You cannot build value if you can't measure it. The starting point is an honest, defensible valuation of the business as it stands today — not a hopeful number, but a baseline you can move from and measure against. Everything else is anchored to it.
A genuine diagnostic. A structured examination across financial, operational, structural and market dimensions — mapping exactly where value is created and, more importantly, where it leaks. Owner-dependency, customer concentration, margin quality, recurring-revenue mix, systems and management depth: each is a lever, and each needs to be assessed coldly.
A real plan, with value attributed in dollars. Not a PDF and a handshake, but a prioritised set of initiatives, each tied to a specific, quantified uplift — a "value bridge" from what the business is worth today to what it could be worth at sale. If owner-dependency is dragging the multiple, the plan sets concrete milestones to de-risk it (transitioning client relationships, systemising operations, building the second layer) and quantifies the resulting uplift. Most businesses have five or more such milestones, each attributable to real value.
Then it has to be executed — with accountability, over time, alongside someone who knows what buyers reward and what they discount. This is deliberate, months-long work, and it's the highest-return work available to an owner who has the runway for it.
This is precisely what Rockfield's Value Builder advisory programme does. It runs typically twelve to twenty-four months, beginning with a Phase 1 diagnostic, baseline valuation and 12-month plan — delivered onto a live client portal that tracks your enterprise-readiness score, milestones and value uplift in real time — followed by an ongoing advisory retainer through execution, with monthly working sessions, quarterly reviews and on-call guidance, culminating in a sale process led by Rockfield. Engagements are scoped and priced to the business against a defined plan, and everything invested in Value Builder is deducted from any future Rockfield sale fee. We're deliberately selective: if the numbers won't pay for themselves, we'll say so in the first conversation rather than start a programme that doesn't make sense for both sides.
The point, whether you do this with us or not, is simple: if you have the time, building value deliberately beats preparing value hastily — and the difference, as our own deal book shows, is measured in hundreds of thousands of dollars.
Part 5 — Going to market
Confidentiality first. For most businesses, an uncontrolled leak that you're selling can unsettle staff, customers and suppliers before you've even found a buyer. A disciplined process releases information to qualified buyers only, under a non-disclosure agreement, in stages — a blind teaser first, the full IM only after the buyer is identified and bound to confidentiality. It is rarely a public auction.
Who buys NZ businesses. Understanding your likely buyer shapes the whole campaign. The main types are: individual owner-operators (often buying a job and a lifestyle, funded by savings plus bank lending); trade or strategic buyers (competitors, suppliers or customers who can pay more because of synergies); financial buyers and private equity (for larger, low-dependency businesses that can run without the owner); and existing management or family (a management buy-out or succession). Each values the business differently and needs a different pitch.
The process, end to end. A well-run sale moves through five stages: listen (understanding your business and your goals); prepare (the IM, financial normalisation and a defensible value position); reach (targeted, confidential outreach to qualified buyers); negotiate (holding the line on price, terms and structure through diligence); and settle (coordinated handover with your accountant and lawyer). Expect the whole journey to take somewhere between three and six months for a typical SME — sometimes longer. Rushing it is where value leaks.
Part 6 — Deal structure: it's not just the price
Two offers at the same headline number can be worth very different amounts once you look at structure. The key levers:
Shares vs assets. A buyer can purchase the shares in your company (taking the whole entity, including its history and liabilities) or the business assets (cherry-picking what they want, leaving liabilities behind). Buyers usually prefer asset purchases for the clean slate; sellers often prefer share sales. The choice has significant legal and tax consequences on both sides and should be modelled before you agree a price — the structure can be worth more than a few percent on the number.
Earn-outs. Part of the price is deferred and contingent on the business hitting agreed targets after settlement. Common where the buyer wants to de-risk owner-dependency or a growth story. Manageable, but the targets, the measurement, and your degree of control during the earn-out period must be tightly defined — vague earn-outs are where post-settlement disputes are born.
Vendor finance. You, the seller, effectively lend part of the purchase price to the buyer, repaid over time. It can widen your buyer pool and signal confidence, but you're carrying risk until you're paid, so security and terms matter.
Working capital and completion accounts. Deals are sometimes done on a "cash-free, debt-free" basis with a normal level of working capital left in the business. Getting the working capital mechanism right — and the completion accounts that true it up after settlement — routinely moves real money. It's technical, and it's worth getting advice on.
Restraint of trade. Buyers will require you not to compete or poach for a defined period and area. Reasonable restraints are enforceable in New Zealand; overreaching ones can be read down by the courts. Expect it, and negotiate the scope.
A note on tax
New Zealand has no general capital gains tax, which shapes the landscape favourably compared with many countries — but "no CGT" does not mean "no tax." Depending on structure there can be depreciation recovery, tax on certain restraint-of-trade payments, financial-arrangement rules, and GST considerations, and share sales and asset sales are treated very differently. The imputation system, how you extract proceeds, and your wider structure all matter. This is not the place to save money by skipping advice. Engage an accountant with business-sale experience early — ideally during preparation, not after you've agreed terms.
(This section is general information, not tax or legal advice. Your specific position needs specialist input.)
Part 7 — Due diligence: where deals live or die
Here is the fact most owners underestimate: deals fall over in due diligence far more often than they fall over on price. You can agree a great number and still lose the deal three months later because the buyer's advisers found something that shook their confidence.
Due diligence is the buyer's forensic examination of everything: financial records, tax position, contracts, employment, litigation, IP, health and safety, leases, consents, and the accuracy of every claim in your IM. Surprises kill deals — not because the issue is always fatal, but because a surprise makes the buyer wonder what else they haven't been told.
The defence is preparation. The twelve-month roadmap above is, in large part, pre-emptive due diligence: you find and fix the problems before a buyer does. Beyond that: assemble a complete, organised data room before you go to market; disclose known issues early and on your own terms rather than letting them be discovered; keep the business performing during the process (a dip in trading mid-diligence is a classic deal-killer); and maintain momentum, because deals that drift lose energy and die.
Part 8 — Legal, and getting to settlement
Once heads of terms are agreed, the deal moves into legal documentation and completion. The key pieces:
Heads of agreement / term sheet. Usually non-binding on price but binding on process — exclusivity, confidentiality, timeframe. It frames everything that follows.
Sale and purchase agreement (SPA). The binding contract. It sets out price and structure, warranties (your promises about the state of the business), indemnities, conditions, and completion mechanics. Warranties and their limitations are heavily negotiated — this is where a good commercial lawyer earns their fee.
Lease assignment or new lease. If you lease your premises, the sale almost always needs the landlord's consent to assign the lease (or a fresh lease for the buyer). Landlords can be slow, and consent conditions can bite — start this early, because it's a common cause of settlement delay.
Employee transfer. In an asset sale, employees don't automatically transfer; there's a proper process under New Zealand employment law, and getting it wrong creates liability. Plan the people transition carefully and take advice.
Settlement and handover. Coordinated completion with both lawyers and accountants, followed by a careful transition of staff, customer and supplier relationships. A good handover protects the value you just sold — and your reputation.
Part 9 — The mistakes that cost owners most
- Anchoring value on one big year. Buyers value the trend, not the peak.
- Forgetting the owner's salary. Your $120k in salary doesn't necessarily mean the role you perform is worth $120k.
- Counting growth you haven't delivered. Buyers pay for proven, not projected.
- Ignoring customer concentration. One client at 40% of revenue can halve the multiple.
- Confusing turnover with value. A $5M-revenue business at 4% margins is usually worth less than a $1.5M-revenue business at 25%.
- Letting the business drift during the sale. A trading dip mid-process is a classic deal-killer.
- Skimping on advice to save fees. The wrong structure or a botched warranty costs many multiples of what good advice would have.
Where to start
If you're a year or more from a possible sale, the highest-value thing you can do today is not list — it's prepare. The runway is where the money is made.
If you're closer than that, the priority is a clean-eyed assessment: what's it realistically worth, what's fixable in the time you have, and what buyer is right for this business.
Either way, the worst thing you can do with the value of your life's work is guess.
Rockfield works with New Zealand owners across the full arc of this guide — from early value-building advisory, through defensible valuation, to a discreet, well-run sale. If you're thinking about your exit, even a year or two out, the best first step is a confidential, no-obligation conversation now.
Aaron Toresen is a founder of Rockfield Business Brokers, which represents owners of established New Zealand businesses through valuation, value-building advisory and discreet sale. This guide is general information, not legal, tax or financial advice; your specific situation needs specialist input.