Same leases, same cash payments, same trading year. Restated under a different standard, EBITDA came out over a million dollars higher.
Short answer
Because operating leases are treated completely differently under the two frameworks a Canadian private company might report under. ASPE keeps a straight-line lease expense entirely inside operating costs, above the EBITDA line has nothing to absorb; IFRS 16 pulls the lease off the income statement and replaces it with depreciation and interest on a capitalized right-of-use asset, both of which sit below EBITDA. Identical leases and an identical trading year can therefore produce two materially different EBITDA figures depending only on which standard prepared the numbers.
No statute governs which lease-accounting standard a private company applies. ASPE and IFRS 16 are professional accounting standards set by CPA Canada and the International Accounting Standards Board (IFRS Foundation) respectively, not legislation. ASPE Section 3065 retains the operating-lease/capital-lease distinction, under which an operating lease stays off the balance sheet and its cost sits entirely inside operating expenses. IFRS 16 requires recognition of a right-of-use asset and lease liability for substantially all leases, replacing the rent expense with depreciation and interest — both below the EBITDA line — for annual periods beginning on or after 1 January 2019.
Applying a public-comparable multiple — calibrated on IFRS 16-reporting companies — to an ASPE-prepared EBITDA overstates value unless the deal also recognizes the IFRS 16 lease liability the restatement itself creates, as a debt-like item in the equity bridge. Done together, the two effects run in opposite directions and largely offset; done separately, taking the higher restated EBITDA without the matching liability is simply picking the favourable half of the same accounting change.
See it decided in the two-frameworks-two-EBITDAs case file, the closing-statement accounting-policy file and the take-or-pay commitment file.
A 30-minute call is enough to tell you whether your numbers hold up.
Canadian small-business transaction data is not published anywhere, so most valuations in this country quote an American benchmark. The Deavo–Treadstone Acquisition Index is a daily record of Canadian listings built to replace that: asking-price distributions by province and city are published now, and days on market, departure rates and asking-to-sale spreads follow as the series lengthens. Leave an email and we will tell you as each measure lands.
No pitch, no listings. One email when the first report lands.
