Due diligence
Quality of earnings, unusual items, related-party transactions, and the gap between management reporting and a set of statements you can trust. Scope is sized to the deal and the state of the books.
Services · Buying a Business
Buying a business: diligence and structure
Before you sign, someone has to test the accounts, compare a share deal with an asset deal, and say whether the price still makes sense. This practice does not broker businesses.
What a buyer needs from a CPA and CBV
Amir Rosenthal helps buyers in Ontario, including Toronto and the GTA, read a target the way an accountant and valuator would: what earnings are maintainable, what working capital should convey, what tax is waiting, and whether the asking price is supportable.
Share versus asset
Different tax, different liabilities, different depreciation. A share purchase takes the company as it stands; an asset purchase lets parties choose what transfers. The choice is commercial, and it should be modelled before the letter of intent hardens.
Deal structure
Earn-outs, holdbacks, working-capital collars, and vendor notes all change the real price. Structure is where valuation and accounting meet the contract.
Diligence in more detail
A useful diligence file does more than tick boxes. It asks whether revenue is recognized the way a buyer will run the business, whether working capital at closing will leave the company able to operate, and whether debt-like items (deferred revenue, unpaid tax, related-party balances) are sitting outside the headline price. Findings feed the negotiation and, where needed, a formal business valuation.
Share versus asset, without slogans
Buyers often prefer assets for a stepped-up cost base and cleaner liability boundaries; vendors often prefer shares for capital-gains treatment. Neither preference is automatic. The analysis looks at tax for both sides, what licences and contracts actually transfer, and how much of the purchase price sits in depreciable property versus goodwill.
If the books raise integrity questions rather than ordinary adjustments, forensic accounting may be appropriate. If you are selling rather than buying, use the selling a business page. After closing, the same practice can continue with accounting and tax.
Common questions
What does accounting due diligence cover?
The work tests whether the numbers you are buying are real, repeatable, and complete enough to price. That usually means quality of earnings, working capital, debt-like items, tax exposure, and the owner’s personal imprint on the results. Scope follows the size of the deal and the quality of the books.
Share purchase or asset purchase, who decides?
Both parties have tax and legal reasons to prefer one or the other. Structure is a negotiation informed by tax, liability, and what is actually being acquired. Amir Rosenthal can walk through the accounting and tax consequences; counsel documents the agreement.
What should a buyer look for in quality of earnings?
Whether reported profits would continue without the current owner’s personal expenses, one-time items, or aggressive revenue recognition. Adjustments for related-party rent, above-market compensation, and non-recurring costs are typical conversation points—not a fixed checklist for every deal.
Can you value a target we are considering?
Yes, where independence and information access allow. A Chartered Business Valuator’s conclusion or calculation is a different product from a buyer’s internal pricing model. See the business valuation page for purposes and limits.
When does forensic accounting come into a purchase?
When the books do not reconcile, related-party activity looks incomplete, or there is a concern about misstated results. Forensic work is not routine diligence; it is used when the facts warrant it. See the forensic accounting page.
Do you work with first-time buyers and start-ups?
The practice works with private companies and start-ups, including people buying their first company. A complimentary introductory discussion is the way to see whether the work and the timeline are a fit.
Will you replace our lawyer on a deal?
No. Legal work stays with counsel. The accountant and valuator role is diligence, value, and structure from a numbers perspective, in coordination with the rest of the team. This practice also does not broker businesses.
Complimentary discussion
Call or email. A short first conversation is usually enough to see if the work belongs here.