This article first appeared in the Dominion Post 14 April 2009.
A leading corporate lawyer says a recovery might occur quite quickly once business and building owners become realistic about the value of their assets.
Barry Brown, a partner with Chapman Tripp, says the recession is "resetting everything" from the value of the house next door to the way the sharemarket has repriced Auckland Airport.
While this was not pleasant, he said, previous recessions had shown that housing, for example, had turned when owners accepted the new value of their homes.
In the six years from the 1987 sharemarket crash to 1993, he said, "it took a long time for owners of assets to recognise the new reality that the asset was not worth as much as it used to be. Were they ever worth that much?"
Mr Brown has overseen the sale or mergers of many of this country's biggest deals in the last 20 years, including the Government's sales of the Bank of New Zealand and Telecom.
He also advised the Government on the recapitalisation of Air New Zealand, Lloyds TSB on the sale of the National Bank to ANZ, and Independent Newspapers on the $1.19 billion sale of its publishing business to the Fairfax Group.
Mr Brown said business opportunities would begin to emerge once the market established what assets were worth.
"Take a property development. A half-done property development isn't worth very much, but I think out of this will come astute people who will invest in what I would call a distressed asset.
"And there will be distressed financial assets, they might be financial company loans that are of doubtful value and have to be written off and there will be people who will be interested in buying some of those."
Other opportunities might result in management buyouts or innovative New Zealanders buying back some of the smaller assets that had gone overseas.
As a mergers and acquisitions lawyer, he did not feel emotional about New Zealand assets going overseas but he felt some personal conflict about coastal land being bought by people overseas.
People also sometimes forgot the contribution overseas companies could make.
"There's no doubt Kiwis are innovative but we don't have knowledge of or access to all forms of innovation...I don't believe we can sit in this part of the world and just go the "New Zealand for New Zealanders' route."
In the current climate, mergers and acquisitions generally were "not at a standstill but it is quiet - relative to where it's been in the last few years, it's very quiet."
His firm's decision some years ago to set up a business restructuring and insolvency division had proven very successful, with Bridgecorp one of its clients.
Mr Brown advised businesses to ensure they were well abreast of their business performance and legal position, to talk to bankers early on, and be decisive about whether it was worth hanging on.
"Yes, it's going to be tough but we've seen some of this before. Don't get too worried about the legal side of it, be realistic, get your view on the value of your assets realigned quickly, and move on."
Barry Brown is a partner at Chapman Tripp. The views expressed here are his own and may or may not represent those of the firm or its clients.