Search:

Grant Thornton New Zealand has partnered with Syndex, a digital private markets ecosystem designed to cultivate better access to capital and investor relationships for private businesses, in an easy-to-use online environment.

Accelerate your growth with a buy-and-build strategy, or sell an entity for the highest possible value.

Yesterday’s introduction of a taxation bill which proposes to charge GST for online services is a hit to the pocket that won’t be popular with Joe Public, says Dan Lowe, Associate, Tax at Grant Thornton New Zealand.

New Zealand business owners are ranked among the highest in the world in their desire to have existing staff to buy their businesses.

Innovation is crucial to the success of any organisation, or economy for that matter. So how can you grow innovation?

We are supporting an online initiative, launched this month, appointbetterboards.co.nz, which aims to makes it easier for New Zealand’s privately held businesses (PHBs) and Not for Profit organisations (NFPs) to connect with advisers and build stronger advisory boards and boards of directors.

All too often, changes to tax legislation happen at a glacial pace in this country. As a nation, we can’t afford to let that happen with the GST changes required to modernise the law and processes to capture GST from overseas online purchases. With Budget 2015 fast approaching, it’s time for the Government to readdress this to ensure the market isn’t distorted based on the tax residence of suppliers.

Every leader wants to leave a legacy to mark their time at the helm. Be they politicians, chief executives, sportspeople or school principals, everyone wants to be remembered as someone who made a difference.

There’s new GST legislation in place for online marketplaces, which includes short-term accommodation platforms like Airbnb, ride-sharing platforms like Uber and delivery services like Uber Eats. These online platforms must now collect 15% GST and return it to Inland Revenue. This ‘app tax’ came into effect on 1 April 2024, and it’s already having an impact on the market.

Matt Hannah

| 20 min read | 11 Apr 2024

The tendency of Not for Profit organisations in New Zealand to rely on enthusiastic volunteers to manage their social media activities is described in a special report as risky and recommends they follow the Australian sector and invest more in this area.

New Zealand’s national lockdown should not cause any significant disruption to the level and quality of service that Grant Thornton is proud to deliver.

The Government will always consider additional revenue streams and have been seriously contemplating the GST threshold level – although it looks unlikely that there will be any adjustments in the upcoming Budget as the promised review has now been pushed beyond the election.

While many Not for Profit organisations (NFPs) consider social media to be an important channel to deliver their communications and fundraising goals, few incorporate social media as a core strategy to capitalise on interactive opportunity to engage with new communities.

The festive season means shopping, celebrating, and going on holiday – but unfortunately, it’s also Christmas time for the bad guys. When we conduct our business online, we give them more opportunities than ever to steal our money and our information.

Raj Tiwari

| 22 Dec 2021

A lot of online scams are pretty obvious. Your bank isn’t going to send you emails about your balance expiring soon. And you know the IRD isn’t going to send you a text to transfer your tax rebate. Unfortunately, the types of scams most likely to affect New Zealand businesses are considerably more sophisticated.

New Zealand is struggling to reach its Kyoto targets and balance its books, so any moves by the Government in Budget 2015 to support electric vehicles will go a long way to alleviate these problems.

Grant Thornton New Zealand has acquired the management advisory firm Management Toolbox Ltd, reflecting the increasing demand from New Zealand business owners for advice on how to take advantage of the emerging growth trends in their key markets.

Some years ago, I remember someone bemoaning New Zealand business owners’ lack of ambition. This person said when owners have grown their businesses big enough to start to look overseas they then sell, as long as the sale price would allow them to join the Triple “B” and buy a bach, a BMW and a boat. Although I hadn’t heard of this club before, the point that stuck with me was the comment about the real value of a company being unlocked globally by its new owners. I think things have moved on significantly since then with New Zealand companies such as Seequent selling for $1.46 billion, Ziwi for around $1 billion and Partners Life also for $1 billion. Certainly, a lot more that a ticket to join the Triple “B” club! Gone are the days when companies sold for 3-4 times EBITDA (earnings before interest, tax, depreciation and amortisation) or maybe 7-8 times EBITDA if the buyer had Australian pension fund money looking for a home. Deals like Seequent are not referable to EBITDA at all, with technology companies increasingly being sold at multiples of sales instead – sometimes up to 45 times sales and beyond. How to get the best bang for your buck when selling your business While you are sitting at the beach or lake over Christmas, thoughts of selling your company may cross your mind. If so, there are lots of things you might need to start thinking about. Firstly, get sale ready. When a company is sold, there will almost certainly be some level of due diligence – typically covering finance, legal and tax. A buyer doesn’t want any nasty surprises. Preparing for this will involve ensuring everything is in order – making sure all agreements, processes and procedures are documented and all information likely to be needed is collated and ready to provide. Some businesses plan for this several years ahead and look to have their annual accounts prepared and audited. These actions, though worthwhile, are generally house-keeping tasks and won’t necessarily increase the value of your business. So what can add value, or at least bump-up the multiple of earnings that a purchaser is willing to pay? When it all boils down, the value of a business is based on the demonstrable track record of sustainable earnings, or the prospect of growth in earnings in the future - or, ideally the combination of both. Therefore, being able to prove the reliability of your revenue and profits, and the strength of your position in the industry is worthwhile. It’s also important to have a well thought out set of financial projections which demonstrate the growth prospects for the business and how these can be achieved. Is growth going to come from the existing product base, new product development or bolt-on acquisitions to increase presence and market share? How much will this cost, and what are the potential returns if actioned? The other key question a purchaser will want answered is around people, and most specifically you! What does the business look like with you – are key customer and supplier relationships shared across a management team, meaning your exit from the business is not detrimental to its performance? Answers to these questions are usually presented in an Information Memorandum (IM), a short sales document used to market the business to prospective purchasers. Detailed sell side due diligence reports can also be provided to prospective buyers. While this won’t generally stop buy side due diligence being undertaken, it can help buyers get to the heads of agreement stage more quickly and ensure all the information and materials are ready for due diligence questions. Once a heads of agreement (high level terms likely to be reflected in any future sale and purchase agreement entered into) has been signed, a buyer will typically be granted a period of time where they have exclusive rights to undertake due diligence, and formalise a contract and purchase price. If they decide to proceed, the buyer will submit the first draft of a sale and purchase agreement. The buyers and seller will negotiate the terms of the sale and purchase agreement with the document going backwards and forwards between the buyer’s lawyers and the seller’s lawyers. The document may go back and forwards several times while clauses are negotiated. Will you sell shares or assets? A business sale can involve shares in the company or its assets. The advantage of a share sale for the seller is they can walk away and often the sale proceeds are a tax-free capital gain. The disadvantage for a buyer is they inherit any “skeletons” buried within the company not identified during due diligence. Often the sale and purchase agreement will seek to put some of these risks back on the seller in the form of vendor warranties and indemnities. Under warranties and indemnities, the seller will have to refund part of the purchase price if specific things are identified or occur. Where the seller still wants to draw a line in the sand and not have to worry about warranties and indemnities, it is possible to obtain warranty and indemnity insurance. This is specialist insurance, and a premium is paid to the insurer to transfer the risk arising from warranties and indemnities post sale to the insurer. Typically, the warranty and indemnity insurer will want to review all due diligence reports and may require further due diligence to be undertaken or exclude certain risks. Where business assets are sold, the company’s past stays with the vendor with the business being transferred into an existing or new company owned by the purchaser. This involves changes of ownership of assets, assignment of business contracts and the transfer of employees. It can also involve the purchaser assuming agreed liabilities, such as leases and employee entitlements like holiday and sick pay. When business assets are sold, the vendor will need to wind up the selling company to access any capital gains tax free. What about tax? Purchase price allocation Purchase price allocation is where the parties agree what portion of the overall purchase price is allocated to the various assets acquired and liabilities assumed. This is a key area for negotiation. A purchaser will want to allocate as much of the purchase price as possible to items which will be tax deductible either upfront or at some point in the future, such as plant, patents and trading stock. The seller will want to allocate as much of the purchase price as possible to non-taxable items such as goodwill and trademarks to increase the amount of non-taxable goodwill that they realise. There is generally a natural tension between the seller’s best outcome and the purchaser’s best outcome, so Inland Revenue will generally accept the purchase price allocation agreed between unrelated parties as being a fair market price. GST The purchase price will be either inclusive of GST or have GST added on top. Generally, a seller will insist on the purchase price being “plus GST if any”. The purchase price can be zero rated for GST in certain circumstances, such as where an interest in land is included in the sale (ie, a lease) or where the sale is made to a purchaser outside New Zealand. GST zero rating can also apply to a going concern, ie, where what is being purchased is able to be operated on its own immediately after the purchase is complete without adding anything to it. As most business require premises, it is generally quite hard to have a situation where there is a going concern which isn’t already zero rated for GST due to an interest in land being transferred. There are many more things to consider, and if you are considering selling your business you should get your house in order sooner rather than later. There may be significantly more at stake that membership in the Triple “B” club!

Richard Hughes

| 12 min read | 11 Dec 2023

Social media is now considered more important than traditional print advertising in the food and beverage industry according to the Grant Thornton International Food and Beverage report, ‘Hunger for growth: Food and Beverage looks to the future’.