Due diligence checklist for M&A in Canada

A due diligence checklist is the buyer’s list of everything it needs to see before it signs, and the seller’s list of everything it should gather before it goes to market. In Canada, the categories look familiar, but the documents, registers and regulators are specific to a federation with ten provincial legal systems, a civil law province and two federal merger reviews.

Use this as a starting point. Your lawyers will tailor it to the target’s industry, size and province. For the way a full sale process runs, see our mergers and acquisitions use case; if you sit on the buying side, the buy-side due diligence use case shows how buyers organize their review.

How to use this checklist

Send it as a request list in week one. Number every line. Mirror the numbers in the data room index, so request 4.3 lives in folder 4.3. Mark each line “provided”, “to come”, “not applicable” or “see disclosure schedule”. That discipline saves days of email later.

1. Corporate records

Start with the company’s legal existence and who controls it.

Gaps in Canadian minute books are common in owner-managed companies. Missing annual resolutions can usually be fixed by rectifying resolutions before closing, but the buyer will want them done.

2. Financial statements

Canadian private companies usually report under Accounting Standards for Private Enterprises (ASPE); public companies and many larger private ones use IFRS. Know which one the target uses before comparing it with peers, because the two treat leases, financial instruments and some revenue items differently.

• Annual financial statements for three to five years, noting the level of assurance: audit, review engagement or compilation
• Monthly management accounts for the current year and the last full year
• Budget and forecast, with the assumptions behind them
• Debt: credit agreements with Canadian banks, security registrations under the provincial PPSA (or the RDPRM in Quebec), covenant compliance certificates
• Working capital history by month, to set the peg in the purchase agreement
• Customer concentration and revenue by province or country
• Government assistance: CEBA balances, repayable contributions, grants that come with clawback terms

A buyer’s CPA team will turn these into a quality of earnings report. Expect questions on owner compensation, related-party rent and one-off costs, because adjusted EBITDA is usually the basis of the price. Many owner-managed businesses only have review engagement statements; that is common in Canada and not a problem in itself, but it means the buyer will test more numbers directly.

3. Tax

Tax is where Canadian deals most often find surprises. A small business that loses CCPC status on a sale to a foreign buyer may lose access to enhanced SR&ED credits and the small business deduction going forward, which affects the price model.

4. Employment and benefits

Employment law is mostly provincial. Ontario’s Employment Standards Act, 2000, BC’s Employment Standards Act, Quebec’s Act respecting labour standards and their peers set notice, overtime and vacation rules. In a share deal, employment simply continues. In an asset deal, most provinces treat employment as continuous for the employees the buyer takes on, and the union certification usually follows the business under successor-rights rules.

• Employment agreements, especially for executives, with change-of-control and severance terms
• Employee census: role, start date, pay, province (anonymized in early rounds)
• Collective agreements, certification orders, open grievances and arbitration awards
• Pension plans: registered plan texts, latest actuarial valuation, funding status, filings with the pension regulator
• Benefit plans and insurer contracts
• WSIB clearance certificate in Ontario, WCB letter of good standing in other provinces, CNESST in Quebec
• Contractor agreements and any misclassification risk
• Employment standards, human rights and health and safety complaints

Employee files hold personal information, so staged disclosure applies. PIPEDA s. 7.2 and the provincial privacy acts set the conditions for sharing it without consent, so early rounds should see anonymized data only.

5. Real property and environmental

Real property. Title searches through the provincial land registry (Teranet in Ontario, the Land Title and Survey Authority in BC, the Registre foncier in Quebec), leases and amendments, landlord consents to assignment, zoning compliance, building permits and any open work orders.

Environmental. Phase I Environmental Site Assessments prepared under CSA Z768, Phase II reports where a Phase I found issues, environmental permits and approvals, orders from the provincial ministry, records of site condition in Ontario, and spill reports. Environmental liability in Canada can attach to current owners and operators regardless of who caused the contamination, so buyers of industrial land rarely skip this.

6. Intellectual property

Pull registrations from the Canadian Intellectual Property Office (CIPO) for patents, trademarks, industrial designs and copyright. Check that each registration is in the target’s name. Then look beyond the register: IP assignment agreements from founders, employees and contractors, open-source licence use in software, inbound and outbound licences, and any SR&ED-funded work whose IP ownership matters to the buyer. Moral rights waivers are a Canadian detail for copyright works created by employees and contractors.

7. Contracts, privacy, regulatory and litigation

Material contracts. Customer and supplier agreements above a set value, with special attention to change-of-control and anti-assignment clauses, exclusivity, most-favoured-customer pricing, and termination for convenience. Government contracts may need consent to assignment.

Privacy. Privacy policies, a record of breaches (PIPEDA requires records of every breach for 24 months), Quebec PIAs for data held outside Quebec, vendor agreements for cloud services and consents for marketing under Canada’s Anti-Spam Legislation (CASL).

Regulatory. Industry licences and permits: Health Canada licences for drugs, medical devices or cannabis, provincial licences for alcohol, transport, financial services or professional practice, and any conditions that a change of control triggers.

Litigation. Pending and threatened claims, demand letters, settlements, class action exposure and regulatory investigations, with a counsel’s summary of each.

Indigenous consultation, where relevant. For resource, energy and infrastructure targets, gather records of Crown consultation with First Nations, Inuit or Métis communities on permits, any impact benefit agreements (IBAs), and the commitments that pass to a buyer. The duty to consult rests with the Crown, but a project’s permits and timelines depend on how it was met.

Who reviews what

In Quebec, notaries handle real property and many corporate formalities; our Quebec notaries use case shows how they work in a shared room.

Regulatory approvals

Two federal reviews can apply to a Canadian deal. Check both early; they shape the timeline and the closing conditions.

Competition Bureau and Innovation, Science and Economic Development Canada, 2026 thresholds.

Competition Act pre-merger notification

A merger needs advance notice to the Competition Bureau when both size tests are met and, for share deals, the voting interest crosses 20% of a public company or 35% of a private one (or 50% if the buyer is already above those levels). The party-size test is combined Canadian assets or gross revenues from sales in, from or into Canada of the parties and their affiliates above C$400 million. The 2026 transaction-size threshold is C$93 million, measured on the target’s assets in Canada or revenues from them. Once notified, the parties cannot close until the 30-day waiting period ends, and a supplementary information request extends it until 30 days after the parties comply. The Competition Act merger review use case covers the clean team and second-request documents.

Test your own figures below, or open the full Competition Act notification calculator.

Investment Canada Act

A non-Canadian acquiring control of a Canadian business must at least notify, within 30 days after closing. A net benefit review with approval before closing applies above the 2026 thresholds: C$2.179 billion in enterprise value for private investors from trade-agreement countries such as the US, EU members, the UK and Japan; C$1.452 billion for other private WTO investors; and C$578 million in asset book value for state-owned enterprise investors from WTO members. Cultural businesses have far lower thresholds and are reviewed by Canadian Heritage. Any investment, of any size, can face a national security review under Part IV.1. ISED’s initial review period is 45 days, extendable. Our Investment Canada Act review use case explains the filings.

The Investment Canada Act threshold calculator applies the right threshold for the buyer’s status.

A typical timeline

These are typical ranges, not rules. A practice sale with one buyer can close in eight weeks; a deal with a net benefit review can take months. The due diligence timeline calculator gives an estimate for your deal type.

Quebec specifics

A target in Quebec changes the checklist in several places:

• Civil law. Contracts are governed by the Civil Code of Quebec; security over movables is a hypothec, registered at the Register of Personal and Movable Real Rights (RDPRM), not a PPSA registration.
• Language. The Charter of the French Language, amended by Bill 96, requires French versions of contracts of adhesion and some business documents, and businesses with 25 or more employees in Quebec face francization duties. Check compliance and the francization certificate if one applies.
• Privacy. Law 25 duties: a person in charge of protecting personal information, PIAs for data leaving Quebec, and the s. 18.4 agreement for any transfer of personal information in the deal.
• Employment. The Act respecting labour standards and the CNESST for workplace health and safety; successor rules under the Labour Code for unionized businesses.
• Tax. Revenu Quebec assessments, QST registration and Quebec tax credits that may depend on control.

Our Quebec province page covers the province in more depth.

How to run the checklist