Should I be worried if a business has never been audited or reviewed by an accountant?

Not automatically — plenty of small and mid-sized Ontario businesses have never had audited or externally reviewed financial statements, and that alone doesn't mean something is wrong. Many owner-operated businesses prepare their own internal financials or use only a notice-to-reader compilation from an accountant, which involves far less independent verification than a review or audit engagement, simply because the cost of higher-assurance reporting hasn't been justified for a business that size.

What it does mean is that you, as a buyer, are relying more heavily on your own due diligence rather than on a third party's independent check of the numbers, since compiled financial statements largely reflect what the owner reported rather than what an accountant independently verified. That shifts more of the verification burden onto your own accountant during the purchase process, and it's a good reason to build stronger representations, warranties, and indemnities around financial accuracy into the purchase agreement, along with a real conditional due diligence period.

Treat the absence of audited financials as a reason to look harder yourself, not as evidence the business is being misrepresented. A Treadstone business lawyer can help structure protections around this gap.