Buying an existing business can be a smart shortcut: you’re stepping into something with (hopefully) proven revenue, a customer base, suppliers, systems and a brand people already recognise.
But it can also come with hidden issues - unclear ownership of assets, shaky contracts, staff complications, lease surprises, and compliance risks that only show up after settlement.
This 2026 updated checklist is designed to help you ask the right questions early, so you can spot risks, negotiate better terms, and get your legal foundations right from day one.
Keep in mind: these questions are a starting point. The “right” answer depends on the industry, the business model, and how the deal is structured (asset sale vs share sale).
Before You Get Too Far: What Exactly Are You Buying?
One of the biggest traps we see is buyers thinking they’re buying “the business”, when legally they’re only buying certain assets - or they’re accidentally taking on liabilities they didn’t expect.
1) Am I Buying Assets Or Shares?
This is the question that shapes almost everything else.
- Asset sale: you buy selected assets (equipment, stock, IP, contracts if assignable). The seller keeps their company and (usually) its historic liabilities.
- Share sale: you buy the company itself (its shares). You effectively inherit the company’s assets and its liabilities - including unknown ones.
If you’re unsure which structure is best for you, this is a point where tailored advice can save you a lot of headaches (and money) later.
2) What’s Included In The Purchase Price (And What Isn’t)?
Ask for a clear schedule of what’s included, such as:
- Plant, equipment and vehicles (and whether any are leased/financed)
- Stock on hand (and how stock is valued at settlement)
- Customer lists and marketing databases
- Website, domain names, phone numbers, social handles
- Intellectual property (brand name, logo, content, designs)
- Rights to use software systems and third-party tools
A well-drafted sale agreement will spell this out, but you’ll want to confirm it before you’re emotionally (or financially) committed. This is also where a business sale checklist can help you see the usual “missing pieces”.
3) Who Actually Owns The Key Assets?
It’s surprisingly common for “business assets” to be owned personally by the seller, by a related company, or even by a supplier. For example:
- The premises lease might be in a different entity name
- The business name might not be registered, or might be registered to someone else
- The website or domain might be in the name of a past contractor
- The brand might not be trade marked (or could be infringing)
If ownership isn’t clean, you may need additional documents (like assignments) as part of the deal.
4) What Are The Reasons The Seller Is Selling?
You don’t need to treat this as a “gotcha” question - it’s a risk-check question.
Common reasons include retirement, lifestyle change, moving overseas, or starting another venture. But you’ll want to be alert to red flags like:
- Key customer contracts ending or not renewing
- A looming rent increase or lease expiry
- New competition entering the area
- Compliance issues (health & safety, privacy, licensing)
Buying a business is not just buying today’s revenue - it’s buying the quality of the systems that generate that revenue, and the real-world costs that sit underneath it.
5) Can The Seller Prove The Revenue And Profit?
Ask for financial statements, BAS/GST returns, bank statements, and any management accounts available. Then look for consistency between them.
Also ask whether revenue is recurring, seasonal, or dependent on a single product/customer. If it’s highly concentrated, your risk goes up.
6) What Are The “True” Ongoing Expenses?
Sometimes financials don’t reflect what you’ll actually spend after takeover. Ask about:
- Wages (including what the owner currently “does for free”)
- Supplier pricing and whether discounts are personal relationships
- Software subscriptions and licences
- Maintenance costs for equipment
- Marketing spend needed to maintain leads
- Insurance costs
It’s also worth clarifying whether there’s any cash-in-hand trading - aside from being risky, it can cause serious problems when you try to run the business properly post-settlement. If anything seems off, treat it as a major red flag.
7) Are There Any Debts, Security Interests Or Finance Arrangements Attached?
Ask if any assets are under finance, hire purchase, or subject to a security interest. In New Zealand, you’ll often check these issues through due diligence and searches, but you should still ask the seller directly.
If you buy equipment that’s still secured, you can end up paying for something you don’t truly “own” free and clear.
8) What Does The Deal Structure Do To Tax And GST?
Tax is not just an accountant issue - it can affect your cashflow and settlement process. For example, GST treatment can vary depending on whether the sale is a “going concern” and how the agreement is drafted.
If you’re negotiating terms, you’ll want your accountant and lawyer aligned early, not after the agreement is basically finalised.
People, Premises And Day-To-Day Operations: Can You Actually Run It?
Even when the numbers look great, the “operational reality” can make or break your purchase. This is where you test whether the business can keep trading smoothly after the handover.
9) Are Staff Staying On, And What Are Their Current Terms?
Employees can be one of the most valuable parts of the business - but they also come with legal obligations.
Ask for:
- A list of employees, roles, pay rates and hours
- Copies of individual employment agreements
- Leave balances and any unusual entitlements
- Any current disputes, disciplinary processes or performance issues
In many sales, staff will transfer across (or you’ll offer new agreements). Either way, you’ll want clean documentation, including a fit-for-purpose Employment Contract for ongoing roles.
Also ask: does the business rely heavily on contractors rather than employees? If so, confirm they’re genuinely contractors and the relationship is documented (misclassification can get expensive quickly).
10) Is The Lease Transferrable, And Are The Lease Terms Commercially Reasonable?
If the business is location-dependent (retail, hospitality, clinics, gyms), the lease is often just as important as the purchase price.
Ask:
- How long is left on the lease, and are there renewal rights?
- Can the lease be assigned to you, and what conditions apply?
- Are there rent reviews coming up (market review or fixed increases)?
- Who pays outgoings, maintenance and repairs?
- Are there any current breaches or disputes with the landlord?
Before you sign anything, it’s worth having the lease reviewed properly, because one “small” clause can dramatically change your risk profile. A Commercial Lease Review can help you understand what you’re really committing to.
11) What Key Suppliers And Contracts Does The Business Rely On?
Ask for copies of supplier agreements, distribution arrangements, and any key commercial contracts.
Then ask two practical questions:
- Can they be transferred to you? Some contracts require consent to assignment, or they may terminate on a change of control.
- Are the terms still competitive? A “legacy” supplier agreement might lock you into pricing that no longer makes sense.
If the seller says “it’s all on handshake”, don’t panic - but treat it as a prompt to document relationships quickly after takeover so you’re not relying on goodwill alone.
Legal Risk Checks: Are There Any Hidden Liabilities?
This is the part many buyers rush, especially if the seller is friendly and the business “seems fine”. But legal issues are often invisible until something goes wrong.
A careful due diligence process is your chance to find issues before you inherit them (or before you pay full price for them).
12) Is The Business Complying With Consumer And Advertising Laws?
If the business sells to consumers (online or in-person), it needs to comply with core New Zealand consumer protections, including:
- Fair Trading Act 1986: marketing and advertising must not be misleading or deceptive
- Consumer Guarantees Act 1993: goods/services generally must meet certain guarantees, and customers may have repair/replace/refund rights
Ask whether there have been complaints, chargebacks, disputes, or refunds issues. Also check whether the business has terms that match its real practices (especially around returns and cancellations).
Most businesses collect at least some personal information - customer emails, booking details, delivery addresses, staff records, CCTV footage, and more.
Under the Privacy Act 2020, businesses have obligations around how they collect, store, use and disclose personal information. Ask:
- What personal data do they collect, and why?
- How is it stored, and who has access?
- Have they had any privacy complaints or data breaches?
- Do they have a clear Privacy Policy and collection notices where needed?
If there’s an online store or mailing list, privacy compliance is not optional - it’s part of protecting the value of what you’re buying.
14) Who Owns The IP (Brand, Website, Socials, Content) And Is It Protected?
Brand value is often a major reason you’re buying instead of starting from scratch. So you’ll want to confirm you’re actually getting the rights to that brand.
Ask:
- Is the business name actually registered, and by whom?
- Is there a trade mark registration (or pending application)?
- Who created the logo, website, photos, videos, written content and marketing materials?
- Were contractors used, and did they assign IP to the business?
If a designer created the logo and never assigned the rights, you could be buying a brand you can’t legally control. If you want to lock this down properly, sorting out an IP Assignment (where needed) can be a key part of the transaction documents.
15) Are There Any Current Or Threatened Disputes, Claims Or Compliance Issues?
Ask the seller to disclose:
- Any disputes with customers, suppliers, employees, landlords or contractors
- Any demand letters, tribunal claims, disputes notices, or settlement negotiations
- Any regulatory investigations or warnings (for example, health and safety incidents)
- Any unpaid tax, ACC issues, or compliance breaches
Then make sure your sale agreement includes strong warranties, disclosures, and (where appropriate) protections like retention amounts or conditions precedent.
This is also where it helps to understand that “due diligence” isn’t just a buzzword - it’s your best chance to confirm the business is what the seller says it is, and that you’re not inheriting avoidable risk. A Legal Due Diligence process can be tailored to the size and type of business you’re buying.
How To Use These Questions In The Real World (Without Derailing The Deal)
It’s normal to worry that asking too many questions will “scare the seller off”. But serious sellers expect due diligence - and in most cases, asking good questions makes you look like a responsible buyer (not a difficult one).
Use A Simple Three-Step Approach
- Ask early: raise key questions before you’re deeply committed (especially around lease, staff, revenue proof, and disputes).
- Verify: don’t rely on verbal assurances; ask for documents and cross-check where you can.
- Document: make sure the sale agreement reflects what you think you’re buying, including conditions, inclusions, restraints and handover obligations.
Don’t Skip The Handover Details
Even a great business can stumble if the handover is vague. Ask:
- How long will the seller stay on to train you?
- Will they introduce you to suppliers and key customers?
- Are there any systems only the seller knows how to run?
These “practical” points often belong in the sale agreement too, so expectations are clear on both sides.
Make Sure The Agreement Matches The Deal You Think You’re Getting
A good business sale agreement does more than state a price. It should clearly cover:
- what assets are included (and what isn’t)
- how and when settlement happens
- stock valuation process (if relevant)
- warranties and disclosures
- restraint of trade (so the seller doesn’t set up next door)
- handover support and transition arrangements
If you’re at the stage of reviewing a draft agreement, getting it checked before you sign can help you avoid “standard clauses” that are actually unfair in your circumstances. This is where a Business Sale Agreement Review can be a sensible step.
Key Takeaways
- Start by clarifying whether you’re buying assets or shares, because that decision affects what liabilities you may inherit and what documents you’ll need.
- Ask for a clear list of what’s included in the purchase price, and confirm the seller actually owns the assets you think you’re buying.
- Verify the financial picture with real documents (not just verbal assurances), and identify the true operating costs you’ll take on after settlement.
- Check staff arrangements, leave balances, and employment documentation early, as employee obligations can carry over into the sale.
- Review the premises lease carefully, including assignment rules, rent review clauses, outgoings, and renewal rights, especially for location-dependent businesses.
- Confirm the business is compliant with key laws like the Fair Trading Act 1986, Consumer Guarantees Act 1993, and Privacy Act 2020, as non-compliance can create costly disputes.
- Make sure IP (brand, website, content, and marketing assets) is properly owned and transferable, because brand value is often a major part of what you’re paying for.
If you’d like help buying a business, reviewing a sale agreement, or running legal due diligence, you can reach us at 0800 002 184 or team@sprintlaw.co.nz for a free, no-obligations chat.
