New Visa for Business Investors Aims to Boost Succession Planning

A new visa aimed at attracting international business investors has been introduced in New Zealand, providing an unexpected boost for aging business owners. Announced on March 15, 2024, the new business investor visa will allow migrants to gain residency by purchasing existing businesses, a move many hope will facilitate the succession planning needs of retiring baby boomers.

Under this initiative, overseas investors who invest at least $2 million in an established business can secure a fast-tracked residency pathway within 12 months. Alternatively, individuals with a minimum investment of $1 million will have to wait three years for residency approval. To qualify, the target business must have been operating for more than five years, meet specific financial criteria, and employ a minimum of five full-time staff members.

Addressing Business Succession Challenges

Immigration adviser Tobias Tohill expressed optimism regarding the new visa, noting its potential to address the challenges faced by New Zealand’s aging business owners. “There are numerous mature businesses looking for succession plans as the baby boom generation retires,” he stated. Many business owners, often in their 60s or 70s, are ready to step back from operations but are concerned about the future of their enterprises.

Tohill highlighted that certain sectors, particularly in rural areas, are experiencing a significant need for buyers. Medical and dental practices, farms, and specialized industrial companies are among those facing challenges in finding successors. “It’s not just about capital; the new owners must be willing to engage deeply with the business,” he added.

The new visa complements the Active Investor Plus visa, which was launched earlier this year and requires a much larger capital investment of between $5 million and $10 million.

Clearer Guidelines and Enhanced Opportunities

New Zealand’s Immigration Minister Erica Stanford emphasized the streamlined nature of the new business investor visa compared to its predecessor, the entrepreneur visa. This previous visa had low application volumes and high decline rates, largely due to vague criteria that deterred potential investors. Stanford stated that the new visa aims to attract overseas investment that will create and maintain jobs while revitalizing existing businesses.

Migrant investors will be required to meet English language proficiency standards and demonstrate relevant business experience. According to Stanford, “This new visa will bring overseas investment to maintain and create jobs, grow incomes, and breathe new life into existing businesses across the country.”

Critics have pointed out that the previous entrepreneur visa’s ambiguity contributed to investor hesitation. Simon Laurent, chairperson of the Association for Migration and Investment, noted that demand for investors looking to buy and operate companies is high, coinciding with a wave of baby boomer retirements. He remarked, “For the last decade, there have been concerns about businesses folding as owners retire. There is a clear demand for this kind of investment.”

Laurent also commented on the investment thresholds, suggesting they strike a reasonable balance. “The intention is not merely to facilitate residence; it requires investors to actively engage in running their businesses,” he explained. The previous minimum investment for the entrepreneur visa was $100,000, which Laurent argued was insufficient and led to an influx of low-value businesses.

The introduction of this new visa represents a strategic shift in how New Zealand aims to manage its aging business landscape. With clearer guidelines and an attractive investment framework, the government hopes to foster a more robust environment for both sellers and investors in the years to come.

Work is also underway to develop a visa pathway for startup entrepreneurs with scalable, innovative business ideas, further diversifying opportunities for investment and economic growth.