{"id":204492,"date":"2021-04-13T15:46:47","date_gmt":"2021-04-13T02:46:47","guid":{"rendered":"https:\/\/legalvision.co.nz\/?p=204492"},"modified":"2022-11-30T17:44:35","modified_gmt":"2022-11-30T04:44:35","slug":"managing-stock-when-selling-your-business","status":"publish","type":"post","link":"https:\/\/legalvision.co.nz\/business-structures\/managing-stock-when-selling-your-business\/","title":{"rendered":"Managing Stock When Selling Your Business"},"content":{"rendered":"\n<p><a href=\"https:\/\/legalvision.co.nz\/business-structures\/obligations-when-selling-business\/\"><span style=\"font-weight: 400\">Selling your business<\/span><\/a><span style=\"font-weight: 400\"> can be an exciting process. However, managing the logistics and pricing of your stock can be onerous, particularly in industries where you have a significant amount of stock at any one time. The key to this process is preparation and doing the groundwork in advance to work out your approach. While the final details of the sale will be decided in negotiation with the purchaser, it pays to think about your stock in advance if you anticipate it being a gnarly issue.<\/span> <span style=\"font-weight: 400\">This article covers three tips for managing stock when selling your business, including<\/span>: <\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><span style=\"font-weight: 400\">the logistics of the stocktake; <\/span><\/li>\n\n\n\n<li><span style=\"font-weight: 400\">the nature of stock valuation; and <\/span><\/li>\n\n\n\n<li><span style=\"font-weight: 400\">how to manage trickier types of stock.<\/span><\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span style=\"font-weight: 400\">Planning the Logistics for the Stocktake in Advance<\/span><\/h2>\n\n\n\n<p><span style=\"font-weight: 400\">A final stocktake for your business is a crucial piece of logistics in a business sale and purchase. If you operate in an industry where you have a significant amount of stock at any one point in time, you will need to think carefully about when the stocktake should take place and how long it will require. When it comes to settling with the purchaser, you want the most accurate and pinpoint figure possible for the amount of stock in your business.&nbsp;<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400\">Some question to consider for your stocktake include:<\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><span style=\"font-weight: 400\">whether your business\u2019 standard stocktake procedure is sufficient or whether the sale requires a more sophisticated process;&nbsp;&nbsp;<\/span><\/li>\n\n\n\n<li><span style=\"font-weight: 400\">how much time the process will take and how to ensure it is complete before settlement; and&nbsp;<\/span><\/li>\n\n\n\n<li><span style=\"font-weight: 400\">if there are special items of stock that may require a separate or more detailed stocktake.<\/span><\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span style=\"font-weight: 400\">Which Valuation Method Is Best for Your Stock<\/span><\/h2>\n\n\n\n<p><span style=\"font-weight: 400\">How you value your stock can make a substantial difference to your business\u2019 sale price if you operate in a stock-heavy industry. While different industries have different practices for valuation, you should think through what valuation method makes the most sense for your stock in particular. Suppose delivery costs are a significant factor in your business. In that case, it may be a good idea to seek a valuation method that reflects this cost or a portion of this cost (even if this is not the typical practice for your industry).&nbsp;<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400\">Valuation of stock will be a crucial <\/span><a href=\"https:\/\/legalvision.co.nz\/corporations\/5-tips-for-selling-your-business-in-new-zealand\/\"><span style=\"font-weight: 400\">point of negotiation<\/span><\/a><span style=\"font-weight: 400\"> with the purchaser if you have a lot of stock. You should enter that negotiation prepared, with a good sense of established industry practice. Likewise, think about how the established industry practice lines up with what methodology you think makes the most sense for your business.<\/span><\/p>\n\n\n\n\n<a href=\"#content-next\"\n   class=\"block p-4 mt-10 text-xl font-bold text-center text-white no-underline bg-gray-800 rounded-t-xl\">\n    Continue reading this article below the form\n    <i class=\"text-xl fa-regular fa-arrow-down\"><\/i>\n<\/a>\n<div class=\"px-6 pt-10 pb-12 mb-10 text-center bg-gray-100 rounded-b-xl sm:px-12 test\">\n    <div class=\"mb-8 text-2xl font-bold text-orange\">\n        Need legal advice?\n        <br>\n        <span class=\"text-lg not-prose\">\n                            Call <a href=\"tel:+64800005570\" class=\"not-prose\">0800 005 570<\/a> for urgent assistance.\n                <br>\n                Otherwise, complete this form, and we will contact you within one business day.\n                    <\/span>\n    <\/div>\n\n    \n\n<div class=\"not-prose flex justify-center text-left 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For instance, you may have a large amount of old or expired stock in your business. Sometimes, this kind of stock is discounted completely from a stock valuation. Other times, it is partially discounted and included. If your old stock is perishable, you may need to be realistic about how much the purchaser may be willing to pay for it and be willing to discount that stock price.\u00a0<\/span><\/p>\n\n\n\n    <div class=\"my-7 lg:my-10 border-y-2 border-gray-100 py-7 lg:py-10 flex flex-col sm:flex-row items-start gap-10\">\n                    <img decoding=\"async\" class=\"w-52 mx-auto my-0! rounded\" src=\"https:\/\/img.legalvision.com.au\/wp-content\/uploads\/sites\/2\/2021\/10\/28131832\/how-to-sell-your-business-guide-_-560x792-1-e1635392481928.png\" alt=\"Front page of publication\"\n                 loading=\"lazy\" width=\"208\" height=\"298\">\n                <section>\n            <div class=\"text-2xl font-bold\">How to Sell Your Business in New Zealand<\/div>\n            <div class=\"body-text\">\n                <p>Looking to sell your business? This free guide will help you to understand the moving parts that impact a successful sale. <\/p>\n            <\/div>\n            \n\n<a href=\"https:\/\/go.legalvision.co.nz\/guide-to-selling-your-nz-business.html\" class=\" block px-5 py-3.5 max-w-fit bg-orange button__hover transition rounded text-white font-bold text-lg no-underline uppercase leading-tight text-center\" target=\"\" rel=\"\">Download Now<\/a>        <\/section>\n    <\/div>\n\n\n\n\n<h2 class=\"wp-block-heading\"><span style=\"font-weight: 400\">Key Takeaways<\/span><\/h2>\n\n\n\n<p><span style=\"font-weight: 400\">Managing stock when selling a business, particularly when you have a lot of stock, can be a tricky and convoluted process at times. Some tips for approaching this process involve:<\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><span style=\"font-weight: 400\">thinking through the logistics for the stocktake in advance;<\/span><\/li>\n\n\n\n<li><span style=\"font-weight: 400\">deciding which valuation method is most appropriate for your kind of stock; and&nbsp;<\/span><\/li>\n\n\n\n<li><span style=\"font-weight: 400\">considering how to differentiate between types of stock, particularly concerning old and expired stock.&nbsp;<\/span><\/li>\n<\/ul>\n\n\n\n<p><span style=\"font-weight: 400\">If you want to know more about how to value or manage the logistics of stock when selling your business, contact <\/span><a href=\"https:\/\/legalvision.co.nz\/business-sale-purchase-lawyers-lp\/\"><span style=\"font-weight: 400\">LegalVision\u2019s business lawyers<\/span><\/a><span style=\"font-weight: 400\"> on 0800 005 570 or complete the form on this page.<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span style=\"font-weight: 400\">Frequently Asked Questions<\/span><\/h2>\n\n\n\n<div class=\"schema-faq wp-block-yoast-faq-block\"><div class=\"schema-faq-section\" id=\"faq-question-1618281434161\"><strong class=\"schema-faq-question\"><strong>Do you always need to appoint a third party to value stock?<\/strong><\/strong> <p class=\"schema-faq-answer\">No. While you can appoint an independent stocktaker or valuer to assess the value of your stock, doing so can be pricey. Likewise, you are not legally required to do so. This is a matter for negotiation with the purchaser. However, it is usually preferable to agree on a methodology for valuation that all parties are happy with.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1618281450754\"><strong class=\"schema-faq-question\"><strong>What if there is a dispute with the purchaser about the value of stock?<\/strong><\/strong> <p class=\"schema-faq-answer\">There are a few different ways of managing a dispute with a purchaser about stock valuation. Try to reach a consensus point if possible if there are differences of opinion in terms of the correct way to value the stock. Alternatively, you could make changes elsewhere in the agreement as a way of getting consensus, such as to discount any old stock in exchange. If there is a real impasse, getting a third party such as a valuer involved may be your only option.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1618281465446\"><strong class=\"schema-faq-question\"><strong>How should expired stock be valued?<\/strong><\/strong> <p class=\"schema-faq-answer\">There is no universal practice for how to value old or expired stock. As with most elements of a business sale, this is a point for negotiation with the purchaser. It also changes industry to industry. You may need to completely discount the value of old stock in a time-sensitive wholesale market, but you may be able to just partially discount old stock in a market where the goods remain largely saleable.<\/p> <\/div> <\/div>\n<div class=\"not-prose m-feedback-prompt\">\n    <!-- Thumbs up\/down bar -->\n    <div class=\"m-feedback-prompt__main\">\n        <div class=\"m-feedback-prompt__title\">Was this article helpful?<\/div>\n        <div>\n            <!--span class=\"m-feedback-prompt__button--text\">Thanks!<\/span-->\n            <button type=\"button\" class=\"m-feedback-prompt__button m-feedback-prompt__button--yes\"\n                    data-analytics-link=\"feedback-prompt:yes\" aria-label=\"Agree\">\n                <i class=\"fa-regular fa-thumbs-up fa-3x\"><\/i>\n            <\/button>\n            <button type=\"button\" class=\"m-feedback-prompt__button m-feedback-prompt__button--no\"\n                    data-analytics-link=\"feedback-prompt:no\" aria-label=\"Disagree\">\n                <i class=\"fa-regular fa-thumbs-down fa-3x\"><\/i>\n            <\/button>\n        <\/div>\n    <\/div>\n\n    <!-- Feedback form -->\n    <div class=\"m-feedback-prompt__form\">\n        <div class=\"m-feedback-prompt__form--thanks \">\n            <div>Thanks!<\/div>\n            <p>\n                We appreciate your feedback \u2013 your submission has been successfully received.            <\/p>\n        <\/div>\n        <form id=\"contact-form\" class=\"m-feedback-prompt__form--form\" action=\"\" method=\"post\">\n            <input type=\"hidden\" id=\"authenticity_token\" name=\"authenticity_token\" value=\"90c4126e1b\" \/><input type=\"hidden\" name=\"_wp_http_referer\" value=\"\/api\/wp\/v2\/posts\/204492\" \/>            <input value=\"https:\/\/legalvision.co.nz\/business-structures\/managing-stock-when-selling-your-business\/\" type=\"hidden\" name=\"currenturl\"\n                   id=\"currenturl\">\n            <input value=\"Managing Stock When Selling Your Business\" type=\"hidden\" name=\"currenttitle\"\n                   id=\"currenttitle\">\n            <label>\n                <!-- display on thumbs-up -->\n                <span class=\"m-feedback-prompt__feedback m-feedback-prompt__feedback--yes\">\n                    Can you tell us <span class=\"font-semibold\">why<\/span> you found it helpful?\n                <\/span>\n\n                <!-- display on thumbs-down -->\n                <span class=\"m-feedback-prompt__feedback m-feedback-prompt__feedback--no text-lg\">\n                    How can we better improve this article?\n                <\/span>\n                <textarea name=\"feedbackmessage\" id=\"feedbackmessage\" required><\/textarea>\n            <\/label>\n\n            <div class=\"m-feedback-prompt__form--error\" id=\"form-submit-error\"><\/div>\n            <button id=\"submit-contact-form-button\" type=\"submit\" name=\"commit\" class=\"m-feedback-prompt__form--submit\"\n                    data-analytics-link=\"feedback-prompt:submit\">\n                Submit            <\/button>\n        <\/form>\n    <\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>Selling your business can be an exciting process. However, managing the logistics and pricing of your stock can be onerous, particularly in industries where you have a significant amount of stock at any one time. The key to this process is preparation and doing the groundwork in advance to work out your approach. While the<a href=\"https:\/\/legalvision.co.nz\/business-structures\/managing-stock-when-selling-your-business\/\">Continue reading <span class=\"sr-only\">&#8220;Managing Stock When Selling Your Business&#8221;<\/span><\/a><\/p>\n","protected":false},"author":13235,"featured_media":201682,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_relevanssi_hide_post":"","_relevanssi_hide_content":"","_relevanssi_pin_for_all":"","_relevanssi_pin_keywords":"","_relevanssi_unpin_keywords":"","_relevanssi_related_keywords":"","_relevanssi_related_include_ids":"","_relevanssi_related_exclude_ids":"","_relevanssi_related_no_append":"","_relevanssi_related_not_related":"","_relevanssi_related_posts":"206337,1171,217225,153,1176,1503","_relevanssi_noindex_reason":"","editor_notices":[],"footnotes":""},"categories":[4],"tags":[25,54,559,663,754,755],"class_list":["post-204492","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business-structures","tag-small-business","tag-medium-business","tag-selling-a-business","tag-asset-sale","tag-stocktake","tag-valuation"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.1.1 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Managing Stock When Selling Your Business | LegalVision New Zealand<\/title>\n<meta name=\"description\" content=\"Are you looking to sell your business? 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Matt previously worked as an employment lawyer in a top-tier firm in New Zealand, and now works at the University of Auckland as a Research Fellow in the Faculty of Law.","sameAs":["anthony.lieu@legalvision.com.au"],"url":"https:\/\/legalvision.co.nz\/author\/mattbartlett\/"},{"@type":"Question","@id":"https:\/\/legalvision.co.nz\/business-structures\/managing-stock-when-selling-your-business\/#faq-question-1618281434161","name":"Do you always need to appoint a third party to value stock?","acceptedAnswer":{"@type":"Answer","text":"No. While you can appoint an independent stocktaker or valuer to assess the value of your stock, doing so can be pricey. Likewise, you are not legally required to do so. This is a matter for negotiation with the purchaser. However, it is usually preferable to agree on a methodology for valuation that all parties are happy with.","inLanguage":"en-NZ"},"inLanguage":"en-NZ"},{"@type":"Question","@id":"https:\/\/legalvision.co.nz\/business-structures\/managing-stock-when-selling-your-business\/#faq-question-1618281450754","name":"What if there is a dispute with the purchaser about the value of stock?","acceptedAnswer":{"@type":"Answer","text":"There are a few different ways of managing a dispute with a purchaser about stock valuation. Try to reach a consensus point if possible if there are differences of opinion in terms of the correct way to value the stock. Alternatively, you could make changes elsewhere in the agreement as a way of getting consensus, such as to discount any old stock in exchange. If there is a real impasse, getting a third party such as a valuer involved may be your only option.","inLanguage":"en-NZ"},"inLanguage":"en-NZ"},{"@type":"Question","@id":"https:\/\/legalvision.co.nz\/business-structures\/managing-stock-when-selling-your-business\/#faq-question-1618281465446","name":"How should expired stock be valued?","acceptedAnswer":{"@type":"Answer","text":"There is no universal practice for how to value old or expired stock. As with most elements of a business sale, this is a point for negotiation with the purchaser. It also changes industry to industry. You may need to completely discount the value of old stock in a time-sensitive wholesale market, but you may be able to just partially discount old stock in a market where the goods remain largely saleable.","inLanguage":"en-NZ"},"inLanguage":"en-NZ"}]}},"_links":{"self":[{"href":"https:\/\/legalvision.co.nz\/api\/wp\/v2\/posts\/204492","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/legalvision.co.nz\/api\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/legalvision.co.nz\/api\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/legalvision.co.nz\/api\/wp\/v2\/users\/13235"}],"replies":[{"embeddable":true,"href":"https:\/\/legalvision.co.nz\/api\/wp\/v2\/comments?post=204492"}],"version-history":[{"count":4,"href":"https:\/\/legalvision.co.nz\/api\/wp\/v2\/posts\/204492\/revisions"}],"predecessor-version":[{"id":219139,"href":"https:\/\/legalvision.co.nz\/api\/wp\/v2\/posts\/204492\/revisions\/219139"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/legalvision.co.nz\/api\/wp\/v2\/media\/201682"}],"wp:attachment":[{"href":"https:\/\/legalvision.co.nz\/api\/wp\/v2\/media?parent=204492"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/legalvision.co.nz\/api\/wp\/v2\/categories?post=204492"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/legalvision.co.nz\/api\/wp\/v2\/tags?post=204492"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}