When buying or selling a business in Canada, it’s essential to understand the difference between due diligence and an audit. While both involve reviewing financial information, their purpose, scope, and timing are different.
Timing:
Audit: Conducted annually or periodically to meet compliance requirements.
Due Diligence: Conducted before a transaction to assess value and risk.
Scope:
Audit: Focuses on verifying the accuracy of financial statements.
Due Diligence: Goes deeper, examining revenue quality, liabilities, operational issues, market conditions, and growth potential.
Objective:
Audit: Provides assurance to shareholders and regulators.
Due Diligence: Protects investors and buyers from overpaying or inheriting hidden problems.
At Aspen Valuations, our due diligence process gives Canadian clients the insights they need to proceed with confidence.
