M&A Financial Due Diligence in Calgary: A Buyer and Seller Checklist
A Calgary-focused financial due-diligence checklist for buying or selling a private business, covering earnings quality, working capital, debt, tax, forecasts and data-room controls.
Quick answer
What Calgary business owners should know
- Financial due diligence tests whether the target's reported performance, assets, liabilities and forecasts are supported by the underlying records.
- Commercial, financial and legal due diligence overlap, but they are different workstreams led by professionals with different responsibilities.
- Quality of earnings, working-capital trends, debt-like items, tax accounts, customer concentration and forecast assumptions deserve explicit review.
- A controlled data room, request log and reconciliation trail reduce version confusion and make unresolved issues visible before closing.
What financial due diligence is designed to test
BDC describes due diligence as a review of a target's prospects, finances and legal issues that helps a buyer test the investment thesis, identify risks and confirm whether the initial value and letter of intent still make sense. It separates commercial, financial and legal diligence. Financial work reviews the numbers and their drivers; legal work addresses rights, obligations and documents; commercial work considers the market, customers and operating position.
The work should be scaled to the transaction. A small local service company does not need the same data request as a multi-entity manufacturer, but both need a clear perimeter, period, materiality and responsibility list. Before opening a data room, agree on whether the transaction is for assets or shares, which entities and locations are included, the expected closing mechanism and the decision questions the analysis must answer.
Build the review around financial claims
Do not request documents without connecting them to a claim. If the seller says revenue is recurring, test contracts, renewals, churn, invoicing and collections. If margins improved, reconcile price, volume, labour, materials and classification changes. If working capital is stable, compare monthly receivables, inventory, payables, customer deposits and tax accounts. If the forecast assumes growth, identify the contracts, capacity, hiring, capital spending and cash needed to deliver it.
A quality-of-earnings schedule usually begins with reported results and separately presents proposed accounting corrections, non-recurring items, owner-related items and run-rate changes. Each adjustment needs evidence and a clear explanation. Management's proposal is not automatically accepted; the buyer, advisers and valuator determine how it affects their decision.
| Workstream | Questions | Common evidence |
|---|---|---|
| Revenue and margins | How repeatable are sales and gross profit? | Customer and product sales, contracts, invoices, credits, backlog and collections |
| Earnings quality | Which results are recurring and correctly recorded? | Statements, ledgers, payroll, owner accounts and adjustment support |
| Working capital | What normal level is required to operate after closing? | Monthly AR, AP, inventory, deposits and sales-tax balances |
| Debt-like items | Which obligations reduce value or future cash? | Loans, leases, accrued compensation, tax arrears, guarantees and commitments |
| Tax | Are filings current and are exposures or elections documented? | Returns, notices, instalments, payroll and GST/HST reconciliations |
| Forecast and cash | Are assumptions supportable and funded? | Budget model, pipeline, capacity, hiring, capital plan and scenario analysis |
Control the data room and close the open items
Use a numbered request list and read-only data room with named access. Record the period, version, preparer and ledger source for every financial schedule. Reconcile totals before upload, redact personal information that is not necessary, and route questions through one tracker. A missing document should remain marked as missing rather than being replaced by an unsupported management estimate.
Before closing, convert findings into actions: purchase-price definitions, working-capital procedures, tax filings, holdbacks, representations, post-close accounting changes and a first-100-day reporting plan. HBT can support the financial and tax workstream, but it does not replace legal diligence, an independent valuation or specialist reviews of technology, environmental matters or regulated assets.
- What part of M&A due diligence can HBT support?
HBT can help prepare and analyze financial records, tax accounts, working capital, cash flow and management schedules. A lawyer should lead legal diligence and transaction documents, while a qualified CBV or other specialist may be needed for an independent valuation.
Discuss financial due-diligence support
Practical checklist
- Reconcile every shared financial schedule to the ledger or identify the difference.
- Track questions, answers, responsible people and unresolved items in one log.
- Separate historical facts, management estimates and buyer assumptions.
- Model post-close liquidity, debt service, tax payments and integration costs before committing.
Official sources
This guide was prepared from the official sources below. Open them to verify the current rule and review exceptions relevant to your situation.
