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Overseas investment boosts New Zealand businesses

Overseas investment boosts New Zealand businesses

New Zealand business owners are enjoying the benefits of overseas investment, and there are plenty of other Australian publicly-listed and private equity firms keen to put more money into businesses on this side of the Tasman.

The merger and acquisitions arm of leading mid-tier accountancy firm Staples Rodway recently concluded a deal for an Australian publicly-listed company to purchase an Auckland-based business, which had many advantages.

Wesfarmers Industrial and Safety NZ Limited (WISNZ) acquired Associated Process Controls Limited and APC Services Limited (APC), which specialises in the supply, service and support of environmental monitoring equipment used by a wide range of customers.

Cameron White, an advisor from Staples Rodway’s specialist mergers and acquisitions arm, which was recently rebranded Baker Tilly (NZ) Transaction Services Limited, says the deal created a win-win situation for both parties.

“APC’s owners sold on favourable terms, but they will also will have an ongoing involvement in the business and now have a defined exit strategy for themselves. For WISNZ, the deal strengthens their position in a relatively small and concentrated market and provides the opportunity for technical differentiation from their competitors, which will increase the range of services they can offer.”

Mr White says with New Zealand’s generation of baby boomers running successful and valuable, but typically middle-market and family-owned businesses, many will need exit strategies in the coming years.

“There is a real lack of capital in New Zealand to adequately transition these businesses and so there is a very real danger that they will end up deteriorating in value or closing if they can’t get the capital they need. Overseas equity can provide a great solution for these business owners, and as with the WISNZ example, it doesn’t mean the existing owners can’t continue to be involved.”

It was through Staples Rodway’s associate, Baker Tilly International, which has five offices across Australia, that the potential buyers of APC were identified. During the process many more Australian companies indicated they were also keen to invest here, says Mr White.

“There is significant interest from Australian publicly-listed companies, and we have also had direct contact with a number of Australian private equity firms. New Zealand and its business owners shouldn’t be afraid of this, as it provides benefits including more access to equity capital, a solution to succession planning, the potential to protect the long term interests of employees, and it also means you don’t have to sell to a competitor” he says.

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