I’ve started a more than a half dozen businesses, a couple in Canada, taken on investors and had a couple of exits, and I’ve learned a few things over the years. Including this: agreeing on a prove of often the simplest part, it’s what occurs after that is more complicated. That is not to say settling on a valuation is easy! Whether you are looking at buying a business in Canada or investing alongside someone who is, you will eventually ask the obvious question: is this a fair price? 

In the United States, that question has a rough answer. Several firms publish data on what similar businesses actually sold for, broken down by size and industry, so a buyer has something to check a number against. In Canada, that data mostly does not exist. 

This is not a gap in your research. It is a gap in what gets published, and knowing that changes how you should approach the question.

Why There’s No Simple Answer

Ask a broker or an advisor what a Canadian business is worth, and you will usually get a rule of thumb borrowed from the United States. Something like four to eight times adjusted earnings for a smaller company. That range is not wrong, but it was built from American transactions. Nobody publishes an equivalent, regularly updated dataset built from Canadian ones. Canada’s private equity trackers report deal counts and dollar totals. They do not report the price paid relative to earnings on individual transactions. There is no public multiple to point to and say, this is what Canadian businesses like mine actually sell for.

Some advisors will tell you Canadian businesses sell at a discount to comparable American ones, often citing a range like fifteen to thirty percent. That claim shows up often enough that it is worth taking seriously, but it comes from practitioner experience, not a named dataset. Treat it as a starting assumption to test, not a number to build an offer around.

What This Means for You as a Buyer or Investor

The lack of a clean benchmark does not mean valuation is guesswork. It means the burden shifts from checking a market number to building your own case, deal by deal. A few things matter more when there is no reliable index to lean on.

The comparable transactions you can actually find matter more than any published average. If you can get pricing details on a handful of real deals in the same industry, similar size, and similar geography, that beats any general rule of thumb. Even an imperfect one. Brokers, accountants, and industry associations often know about recent local sales that never show up in national data. It’s worth asking them directly, rather than assuming the information does not exist just because it’s not published.

Two companies in the same industry with the same revenue can be worth very different amounts. It depends on how concentrated their customer base is, how much of the earnings depend on the current owner personally, and how consistent the cash flow has been over several years. A market multiple cannot see any of that, but your own diligence has to.

The financing structure behind the deal changes what a fair price even means. A price that works with senior bank debt, a seller note, and a modest equity check is a different proposition than the same price funded entirely with equity. When you’re comparing what you are paying to what similar buyers have paid, make sure you’re comparing similar financing structures, not just similar headline prices.

If you are evaluating a deal alongside an independent sponsor rather than buying a business outright, the same principle applies to the terms of your own investment. The purchase price is only one part of the picture. The preferred return and how the deal is structured all affect what you’re actually paying for your share of the business, so a fair price on the acquisition itself does not automatically mean a fair deal for you as a co-investor.

A Practical Way to Test a Price

Start with the rule of thumb ranges that do exist. Treat them as a wide starting bracket, then narrow from there using the specific business in front of you. A recent Canadian private equity report lays out why no authoritative Canadian multiple exists, and what data is and is not available. It’s a useful starting point before you lean on any number a broker hands you.

From there, pull together whatever real comparable transactions you can find, even a small number. Ask your accountant, your lawyer, or an industry contact whether they know the terms of any recent local sale in the same sector. A single well-documented comparable sale, with real numbers attached, is worth more than a market-wide average.

Then adjust for the specific risks and strengths of the business itself. If the company depends heavily on one or two large customers, that should pull the price down relative to a business with a broad, diversified customer base. This holds regardless of what any published range suggests. If the owner is central to every client relationship and has no plan to stay on or train a successor, that is a real risk. A market multiple will never capture it.

Finally, test the price against the financing you can actually put together. A number that looks reasonable on paper can still be a bad deal if the debt payments do not leave enough room for the business to invest in itself. The same is true if a downturn in one bad year would put the loan covenants at risk.

Where This Leaves You

There is no shortcut that replaces this work. A published Canadian multiple would make the first pass easier, but it wouldn’t replace the need to look closely at the specific business, its customers, its financing, and its risks. Since that number does not exist, the discipline of building your own case, deal by deal, is not an extra step. It is the actual work of valuation, and treating it that way puts you ahead of a buyer who is simply hoping a rule of thumb holds up.