The ongoing closure of the country's border has cut the supply of overseas capital for small, cash-strapped businesses.
Between April and June, 24 listed companies looked to their shareholders and investors for capital to counter the impact of the pandemic, raising $5 billion.
However, PricewaterhouseCoopers (PwC) partner David Bridgman said it had been difficult for smaller, privately-controlled businesses to recapitalise during the Covid-19 crisis.
Those types of businesses often relied on overseas companies and private equity firms to raise capital, but that had been complicated by the border's closure, which had stopped purchasers from visiting New Zealand to complete a deal, he said.
"Most transactions are accompanied by a process known as due diligence where people will check out the operations of the business, the financial performance, legal aspects, commercial aspects and so forth.
"Typically, one would expect that will involve visiting premises, visiting suppliers, visiting customers, face-to-face discussions.
"With a closed border, whilst you can do some of those things remotely via video conference, it's not quite the same as being able to see, and feel and touch things."
Bridgman said businesses needed capital at the moment to either strengthen their balance sheets, make acquisitions or exit their business completely.
"The domestic market struggles to provide all of that capital, it's a much stronger capital market when we've got overseas capital as well."
Borrowing more not a solution
Bridgman said businesses were going to face a lot of pressure when the government's wage subsidy scheme ends later this year, and borrowing more money was not a solution.
"Equity is different from debt, equity is permanent capital and when a large source of permanent capital is restricted or cut off it will make capital much harder to obtain.
"So we think that more businesses will fail without capital."
Bridgman said the transactions going through PwC's corporate finance team had stalled since the pandemic hit New Zealand's shores.
"We have managed to complete a few transactions since then... but the number of completed transactions is way down on where it was."