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  • Writer's pictureShiv Jaidka

Buying or Selling an RTO?

Buying or selling any business is a complex transaction. Particularly in an RTO, you buy or sell shares, and the registration is not transferable. ASQA regulations create other obligations to prepare for self-assessment and the FVRA Tool for change in ownership.


There are also good chances of audit after the first year of change of ownership.


I will quickly discuss how to prepare to sell or buy an RTO.

PREPARING TO SELL YOUR RTO


You need to understand your buyer and the market. Is it just the registration and scope you are selling or the Goodwill (i.e. brand name) and equipment as well? A buyer will look at the financial information, the profits and how well the RTO runs. But ultimately, a buyer is interested in the future and potential of the business. If you can do justifiable forecasts of your business numbers, it will make the process easier for the buyers and attract more buyers. The golden tip is always to run your RTO as if you will sell it. Then, you will get the most value for yourself and show this value to a potential buyer anytime.


PREPARING TO BUY AN RTO


You need to be an educated buyer to understand what is available and what price. The process starts with due diligence to ensure that the seller's financial and non-financial information (including student & staff numbers, contractors, suppliers, and agent relationships) is correct and contains no concealed material facts. It would be best to organise your finances before the negotiation.


The exposure is significant, and you may need to involve the experts, including:


Solicitor: To prepare the share purchase contract and to protect you from the undisclosed facts and liabilities.


RTO consultant: To ensure that AVETMISS reporting is current, RTO is ASQA compliant, Training and Assessment Strategies (TAS) & Learning Management System (LMS) are valuable and with the self-assessment required by ASQA at the change of ownership.


Accountant: To look at the financials and prepare the FVRA Tool. The accountant can also assist with the appropriate structure to purchase the shares for tax planning and asset protection purposes.


The above information provides a brief overview but is not meant to be comprehensive.

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