What does “buying out a partner” actually involve?
It depends on how your business is set up:
- A company: you (or the company) buy your partner’s shares. Once the transfer is done, the change of shareholder — and of director, if they’re stepping down — needs to be recorded with the Companies Office.
- A partnership: you buy their interest in the partnership’s assets and goodwill, and the partnership agreement usually sets out how that works.
- A trust or more complex structure: the steps depend on the deed, and it’s lawyer territory from the start.
Whatever the structure, the practical questions are the same: what’s the share worth, how will it be paid, and what happens to the things your partner was personally tied to?
How do we agree a fair price?
Look at your shareholders’ or partnership agreement first. Many include a buy-sell clause that sets out a valuation method or a process. If there isn’t one:
- Get an independent valuation from an accountant or business valuer.
- Agree what’s in and what’s out — cash in the bank, debts, current-account balances, vehicles.
- Agree the timing, including when your partner stops working in the business.
- Put it in writing, with lawyers on both sides.
A fair price that both people can live with beats a “win” that leaves one of you bitter. You may still need their goodwill with customers and staff.
How can I fund the buyout?
| Approach | How it works | Things to weigh |
|---|---|---|
| Property-secured loan | Borrow from $20,000 up to $1m against NZ property you or a supporting party own, as a first or second mortgage | Clean, one-off settlement; the property is on the line |
| Vendor-financed buyout | Your partner is paid part now and the rest over an agreed period | Cheaper upfront, but keeps you connected — get it documented properly |
| Mix of both | Loan for the upfront portion, deferred payments for the balance | Often the most practical middle ground |
| Unsecured loan | For smaller shareholdings, based on turnover and bank statements | Usually for businesses trading 6+ months |
With property-secured lending, no financials or tax returns are needed for the initial assessment, which helps when year-end accounts are still being finalised mid-split.
What else needs untangling?
This is the part people forget:
- Personal guarantees. If your partner guaranteed a bank facility, lease or supplier account, those creditors will need to agree to release them. Expect to be asked for a replacement guarantee. Our guide to personal guarantees in plain English explains what you’re signing.
- Security over property. If an existing loan is secured on your partner’s house, it will need refinancing or restructuring.
- Bank mandates and access. Update signatories, online banking, IRD and accounting software access.
- Customers and staff. Agree how and when you’ll tell them.
Can the business afford it after the buyout?
This is the question a friend would ask. Your partner was probably doing work that now needs to be done by you or someone you hire. Build that cost into your numbers along with the new repayments. If the business can carry both comfortably, you’re in good shape.
How LendFriend helps
Tell us about the business, the agreed price and your timing. We’ll look at your situation — including property and any existing lending — and match you with a lender from our panel that’s comfortable funding buyouts. We’ll explain the offer plainly so you can decide with your lawyer and accountant.
Start your enquiry and a lending specialist will call you back.
The honest bit
Buyouts get emotional. If you're still arguing about the price, a loan won't settle that — an independent valuation and a good mediator will. Get the agreement right first; money is the easy part.