A strong appetite from overseas investors for buying up New Zealand companies is expected to continue this year despite concerns it would dry up with the clamp-down on foreign investment.

Law firm MinterEllisonRuddWatts says increasing interest from overseas investors and confidence from local buyers drove a lot of deals in the second half of 2018 and it expects that to continue this year.

Silvana Schenone, a partner and corporate division head at MinterEllison, said there were numerous, high-quality opportunities being brought to market at the moment with seller friendly terms.

"Looking at these two trends, we're expecting more high-quality New Zealand businesses to be brought to market in the year ahead."

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Schenone said interest had been strong from overseas investors despite concerns that after the 2017 election and change of government it would be tougher for foreign investors.

"While the Overseas Investment Office's activity in 2018 was aligned with the Government's view, New Zealand's investment profile remained in rude health," she said.

"We are seeing interest from numerous overseas corporates and private equity funds – particularly from Australia, UK and the US. Based on the deals that are active at the moment, we predict this will continue long into 2019."

But the firm also questioned whether the first half of this year was as good as it was going to get for business sellers.

Corporate Partner, Neil Millar said: "The heat in the market could be short-lived, with some buyer remorse expected later in 2019 for buyers who have stretched their terms and their investment dollars."

He predicted that could lead to a cooling in the market in the second half of 2019 as buyers' remorse began to creep in from some who had stretched themselves to do a deal.

"While deals will still get done, buyers may start to demand more balanced terms which could lead to fewer assets being brought to market."

The law firm also warned of ongoing challenges for the New Zealand sharemarket which has been shrinking in size as companies are taken over, de-listed or move to other markets and there have been very few new equity listings.

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"The numbers of new companies listing on the NZX is in decline, and the impact of its revised listing rules is yet to be seen, Schenone said.

"We expect to see more companies being taken private, likely through schemes of arrangements. There is an impact in the capital markets' activity with fewer IPOs, but still substantial capital raising activity."

This week the Financial Markets Authority and the NZX announced a review of the capital markets in a bid to improve the range of products and services available on the exchange.