Completion accounts are financial statements built for the closing date itself, after closing, and used to true up the price a fund actually pays for a target — the default purchase-price mechanism in Canadian mid-market deals.
Completion accounts are the default mechanism in Ontario mid-market and SME deals: a target working capital level is set in the purchase agreement, and at or shortly after closing the actual working capital is measured, with the price adjusted up or down against that target, followed by a post-closing true-up once full accounting records are available. The alternative — pricing off a fixed historical balance sheet instead, with no post-closing recalculation — is what a locked-box mechanism does; completion accounts are the more common route for a Canadian fund buying a privately held target where audited interim numbers are not otherwise available.
The process itself runs in a fixed sequence: the seller prepares an estimated closing statement before closing, using accounting policies the agreement has already fixed; the price paid at closing is adjusted using that estimate; the buyer then reviews the actual, final figures once records are complete; and an independent accountant resolves whatever the parties cannot agree on themselves. Neither side decides unilaterally on closing day itself — "closing day is really just when that pre-agreed mechanism gets applied for the first time."
A fund's acquisition vehicle agrees in June 2026 to buy 100% of a target's shares, closing August 1. The purchase agreement sets a net working capital peg of $2.4M, based on a trailing 12-month average. On the closing date, the seller's estimated statement shows $2.55M, so the buyer pays $150,000 above the base price at closing. Ninety days later, once year-end-quality records exist, the buyer's accountants finalize the completion accounts and find actual net working capital was $2.30M — $100,000 below the peg. The seller now owes the buyer a true-up of $250,000: the $150,000 already overpaid, plus the $100,000 shortfall. The seller disputes the inventory reserve used in the calculation; the unresolved item goes to the independent accountant named in the agreement.
See also: Net working capital peg · Purchase price true-up · Locked-box mechanism.
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