Diligence surfaced something, and the number on the table changed. Work through these in order and you will be able to tell which findings are a fair basis for a lower price, which belong in an indemnity instead, and what leverage you actually have left at this stage of the deal.
What you'll be able to decide
STAGE ONE OF FOUR
Before arguing about a number, know what kind of document produced the finding, and what it actually tests.
Guide
Running financial diligence without a Big Four firmHow a credible quality-of-earnings review gets scoped without a Big Four engagement — read this to understand what the finding in front of you is actually worth.
Definition
Quality of earnings reportWhat a QoE report tests, and how it differs from the financial statements the target already gave you.
Case file
Shareholder benefits and loans found in diligenceA real finding of this kind: personal expenses and a static shareholder loan, and why both were unreported income events, not just an EBITDA add-back.
Case file
An unreported gain that surfaced in diligenceA second: an old, unrelated transaction surfacing years later inside diligence for an entirely different sale.
STAGE TWO OF FOUR
This is the question the path exists to answer, and it is not the same question as whether the finding is real.
Article
Diligence findings that justify a price reductionThe core piece: what separates a fair basis for a lower price from a finding that belongs in an indemnity instead.
Ask an Expert
Does a 'no undisclosed liabilities' rep cover a contingent liability?Whether the representation you are relying on even covers the kind of liability diligence just found.
Definition
Disclosure scheduleWhere the real risk in most purchase agreements actually sits — the exceptions to the reps, not the reps themselves.
Ask an Expert
Does updating the disclosure schedule cure the indemnity too?If the seller updates that schedule before closing, whether it clears the closing condition alone, or the indemnity claim too.
STAGE THREE OF FOUR
Once the finding is characterized, the indemnity package is where the negotiation actually happens.
Guide
Negotiating reps, warranties and indemnitiesThe indemnity package itself: basket, cap and survival period, and the Canadian rules that set a natural floor for each.
Ask an Expert
How long do reps and warranties survive after closing?How long that protection actually lasts, and whether the parties can shorten Ontario’s statutory limitation period by contract.
Case file
Warranties that expired before the problem appearedWhat happens when the real problem shows up after that survival period has already run.
Case file
An escrow neither side could agree to releaseWhat happens when neither side moves to release one, and the agreement has no deadline forcing the question.
STAGE FOUR OF FOUR
The deferred-payment tools available once a number is disputed, and the dates that actually govern them.
Article
Earn-out vs. holdback vs. vendor noteIf cash is not the answer, three deferred-payment tools that get confused for each other and do three different jobs.
Article
The statutory clocks that decide how long a holdback must lastThe dates that actually govern how long a holdback needs to run — set by statute, not by habit.
Once the price survives diligence, the next fight usually is not the price at all — it is the working-capital peg the agreement sets around it.
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.
