Experience or know-how in valuating companies earning with SR&ED in Canada?

searcher profile

March 02, 2026

by a searcher from York University in Toronto, ON, Canada

Hi, Im looking at a company that collects a large portion of profits, steadily, from SR&ED credits in Canada. I'm concerned about the valuation, as any government or program change can drastically alter the margins of this company. Anyone with experience or knowledge in valuations in this space?
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commentor profile
Reply by a searcher
from Carleton University in Calgary, AB, Canada
We generally take the position that SRED benefits should not be part of EBTIDA. There are two reasons for this: (1) SRED is a tax credit closely associated with income taxes - if taxes are excluded from EBITDA, SRED should be as well; (2) SRED is intended for R&D, not for subsidizing ongoing profits. So, once the given project/development ends, the SRED should end too. There are definitely buyers who take a different position than us, so you'll have to make your own judgment call.
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Reply by a searcher
from University of New Brunswick in Toronto, ON, Canada
In my view, SR&ED credits should not be included in earnings and agree with @redacted‌ that it should not be part of EBTIDA. Valuation based on assumption of continuing SRED credits is not particularly sound.
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