What's different about Canadian technicals

The accounting standards, sector valuation methods, disclosure rules and deal mechanics that come up in Canadian interviews but not in U.S. guides.

Start with the standard technicals

Canadian interviews test the same foundations as anywhere else: how the three statements link, enterprise value versus equity value, comparable companies, precedent transactions, DCF, accretion and dilution, and LBO basics. Valuation, accounting and markets are the themes candidates report most often, so get those solid first. This primer covers the Canadian layer on top: what changes, what comes up in sector interviews, and the deal structures you'll hear about.

Accounting: IFRS, not U.S. GAAP

Most Canadian public companies report under International Financial Reporting Standards (IFRS), which Canada adopted for publicly accountable enterprises in 2011. Some companies also listed in the U.S. use U.S. GAAP instead. The differences that come up most:

Leases (IFRS 16): Almost all leases go on the balance sheet as a right-of-use asset and a lease liability, and the cost appears as depreciation and interest instead of rent. Both sit below EBITDA, so a company reports higher EBITDA under IFRS than if it expensed rent, and its debt includes lease liabilities. When comparing multiples, treat every company the same way: include leases in both EV and EBITDA, or in neither.
Impairment reversals: IFRS lets a company reverse an earlier write-down of assets (other than goodwill) if conditions improve. U.S. GAAP does not. This matters in mining and energy, where asset values swing with commodity prices.
Cash flow classification: IFRS gives companies some choice in where interest and dividends appear on the cash flow statement, so read the notes before comparing operating cash flow across companies.
Development costs: IFRS requires some development spending to be capitalised once certain criteria are met, where U.S. GAAP expenses most of it. It matters for technology and life sciences companies.
Investment property: IFRS lets real estate companies carry investment properties at fair value, which is why Canadian REITs report fair value changes and why analysts focus on FFO and AFFO, using industry definitions from REALPAC.

A classic question: 'A Canadian retailer and a U.S. retailer trade at the same EV/EBITDA multiple. Are they equally expensive?' The answer depends on how leases are treated in each company's numbers.

Valuation details that change in Canada

Tax rate: The combined federal and provincial corporate rate for large companies varies by province: about 23% in Alberta, 26.5% in Ontario and Quebec, and 27% in British Columbia. Use a Canadian rate, not a U.S. one, in a DCF of a Canadian business.
Reporting currency: Many Canadian-listed companies, especially miners and energy producers, report in U.S. dollars while their shares trade in Canadian dollars. Keep currencies consistent when building comparables or an EV bridge.
Preferred shares: Canada has an active preferred share market, and banks, insurers, utilities and pipelines often have prefs outstanding. Add them in the bridge from equity value to enterprise value, as you would debt.
Non-controlling interests: Common in Canadian holding companies and infrastructure structures. When a company consolidates a subsidiary it doesn't fully own, add the minority interest to enterprise value so it matches the consolidated EBITDA.
Cost of capital: Use Government of Canada bond yields and an equity risk premium suited to Canadian equities for a Canadian business; for global companies, be explicit about which market and currency your discount rate reflects.

Valuing mining companies

Mining is where Canadian technicals differ most from generic guides, and it comes up constantly in Toronto and Vancouver mining interviews and at specialists such as Red Cloud, SCP Resource Finance and Sprott.

Net asset value (NAV). A mine has a finite life, so it is valued with a discounted cash flow over that life: production, commodity prices, operating and capital costs, taxes and royalties, discounted at a rate that reflects risk. The mines are summed, then corporate costs, debt and other items are adjusted to reach a company NAV. Price-to-NAV (P/NAV) is the standard comparison multiple.
Producers vs. developers vs. explorers. Producers are also compared on EV/EBITDA and cash flow multiples. Developers are valued mainly on NAV with a discount for construction and financing risk. Explorers, with no defined mine yet, are often compared on enterprise value per resource ounce or pound.
Development stages. A project moves from exploration through a preliminary economic assessment (PEA), a pre-feasibility study (PFS) and a feasibility study (FS), then construction and production. Risk falls, and P/NAV usually rises, as it advances.
Costs. All-in sustaining cost (AISC) is the common measure of what it costs to produce an ounce of gold, including sustaining capital and overhead.
Resources vs. reserves. Resources (measured, indicated, inferred) are mineralisation with reasonable prospects of extraction; reserves (proven, probable) are the part shown to be economically mineable in a study. A full NAV usually rests on reserves.
NI 43-101. The Canadian rule on how mining companies disclose scientific and technical information, including resources and reserves, usually through a technical report signed by a qualified person.
Jurisdiction. Political, permitting and tax risk in a project's country lowers what investors will pay, through a higher discount rate or a lower multiple.
Royalties and streams. Companies such as Franco-Nevada and Wheaton Precious Metals pay miners upfront for a share of future revenue (a royalty) or the right to buy future metal at a fixed low price (a stream). Both are common ways to fund construction.

Valuing energy companies

Reserves-based NAV. Oil and gas producers are valued on the discounted cash flow from their reserves, typically proved (1P) and proved plus probable (2P), using a production profile that declines over time (the decline curve).
NI 51-101. The Canadian rule on how oil and gas companies disclose reserves, which are evaluated by independent qualified reserves evaluators.
Trading metrics. Producers are compared on enterprise value per flowing barrel of daily production, EV to debt-adjusted cash flow (EV/DACF), netbacks (the cash margin per barrel) and reserve life.
Canadian pricing. Canadian heavy oil trades at a discount to the U.S. benchmark, known as the WCS–WTI differential, which depends heavily on pipeline capacity. The Trans Mountain expansion, in service since 2024, and LNG Canada on the West Coast show how export capacity shapes the sector.
Midstream. Pipelines and processing companies are valued more like infrastructure: on long-term contracted cash flow, EV/EBITDA and dividend yield.

Other sector methods

Banks and insurers: Price-to-book and price-to-earnings, with return on equity driving the multiple. EV/EBITDA isn't used, because debt is part of operations.
REITs: Price-to-FFO and AFFO, net asset value per unit and capitalisation rates.
Utilities: Regulated rate base, allowed return on equity and price-to-earnings.

The Canadian deal toolkit

Raising equity

Bought deal: The underwriters commit to buy an entire offering at a fixed price, often agreed overnight, before marketing it, then resell it to investors. The issuer gets certainty; the banks take the risk.
Marketed offering: Shares are marketed to investors first and priced at the end, so the price reflects demand but the issuer carries more risk.
Private placement: Shares sold directly to a limited group of investors, common for smaller and resource companies.
Flow-through shares: A Canadian structure that lets mining and energy companies pass certain exploration and development tax deductions to investors. Investors often pay a premium to the market price for those deductions.

Buying public companies

Plan of arrangement: The most common way to complete a friendly Canadian takeover. A court issues an interim order, shareholders vote (usually needing two-thirds of the votes cast), and the court holds a hearing to approve the deal as fair and reasonable.
Take-over bid: An offer made directly to shareholders. Canadian rules require bids to stay open at least 105 days (which the target's board can shorten), to have more than 50% of the independent shares tendered before the buyer can take any up, and to be extended at least 10 more days once that condition is met.
Special committee: Independent directors who evaluate a deal when management or insiders have a conflict of interest, usually with their own financial and legal advisers.
Fairness opinion: A financial adviser's view that the consideration in a deal is fair, from a financial point of view, to shareholders. Boards and special committees often ask for one.
MI 61-101: The securities rule that protects minority shareholders in insider bids, related-party transactions and business combinations, including 'majority of the minority' approval and, in some cases, an independent formal valuation.

Approvals

Investment Canada Act: Large acquisitions of Canadian businesses by foreign investors can need government approval as being of 'net benefit' to Canada, and any foreign investment can face national security review.
Competition Act: Mergers above certain size thresholds must be notified to the Competition Bureau, which can challenge deals that would substantially lessen competition.

Questions to practise

How would you value a single-asset gold developer, and how would your answer change once it reaches production?
Why might two identical retailers report different EBITDA in Canada and the U.S.?
Walk me through a NAV for an oil and gas producer.
Why would a company choose a bought deal over a marketed offering?
What is a plan of arrangement, and why is it more common than a take-over bid?
Why does a special committee hire its own financial adviser?
Why might an investor pay more than the market price for flow-through shares?

Tailor your preparation to the seat: mining for Vancouver and mining teams, energy for Calgary, price-to-book for FIG, an LBO for private equity, a pitch for asset managers and hedge funds. Each firm's interview section on BSO shows the themes candidates there report most.

Written by Bay Street Oracle for students exploring Canadian finance. General information, not career or investment advice.