Too often owners approach us to assist in selling their RTO only to find that the business is not saleable. Not only because it’s not profitable or has no students. But because its registration, – the very asset that a buyer must have in order to continue the business, cannot be used by a new owner.

1. STRUCTURING YOUR
RTO FOR SALE

2. Too often owners approach us to assist in selling RTO only to find that
the business is not saleable. Not only because it’s not profitable or has
no students. But because its registration, – the very asset that a buyer
must have in order to continue the business, cannot be used by a new
owner.
Let me explain…
The education and training sector in Australia is highly regulated. The
Australian Skills Quality Authority (ASQA) which is charged with the
responsibility of enforcing the regulations will not permit the transfer of
a registration.

3. Only the person or entity to whom the registration was originally
granted can use it. It follows therefore that if the grantee is an
individual or partnership, no-one other than them can use it…because
it cannot be transferred. Therefore if the business is structured as a
sole trader or partnership, the business cannot be sold. In most cases,
the registration is in the name of a company and for a sale to occur, it
is generally necessary to sell the shares in the company.
All too often, the company is a corporate trustee for a trust and this
can cause complications on sale as well. This structure is usually
recommended by accountants for tax purposes when setting up the
business but a lack of understanding of the regulatory requirements
can lead to this having a detrimental effect when selling. It is most
often necessary to separate the company from the trust before going
on the market and this can involve a lot of time and money.

4. If a registration is in the name of an individual or a partnership, it is
most likely that it will need to be replaced by a new registration in the
name of a company. Even if an application mirrors the existing
registration, it is still subject to the same processing time (circa six
months) and costs (minimum $8,800).
There are circumstances in which a non-corporate holder of a
registration can sell their business but the purchaser needs to already
have a registration and will be required to apply for extensions to scope
that mirror those of the RTO being acquired. This limits the market and
is not always the means preferred by the purchaser.

5. So if you are a prospective RTO seller, the first of your ducks to line up is
to ensure the structure of your business is “sale-compatible”.
Contact Russell Brockie to check your “readiness” for sale – and to find
out how to maximise the value of your business.

6. Contact Info:
Address:
Broker Support Centre, Suite 104, Bermuda
Point, 20 Lake Orr Drive. Varsity Lakes, QLD
4227 Australia
Phone number:
1300 366 521 (toll-free)
+61 7 5562 2711 (international)
07 5562 2744 (fax)
E-mail:
admin@benchmarkbusiness.com.au