Whilst the buying and selling of RTOs has increased in popularity over recent years, it’s not a simple matter of just going ahead without understanding the various factors, inherent risks, and obligations. There are several things you must be aware of to ensure ongoing compliance.
Sales, mergers, and acquisitions, which result in the change of ownership of an RTO, carry important legal obligations.
RTO ownership can change due to the sale of the business entity that owns the RTO registration or via the sale of assets of a business that holds registration to another entity.
A Few Important Considerations When Buying/Selling an RTO
First and foremost, as a vendor, you must advise ASQA promptly of any prospective change to RTO ownership, management, or operation. All information relating to RTO ownership modification must be provided no later than 90 days from the changeover.
Despite what a vendor may tell you, you must understand that RTO registration is attached to the original entity to which it was issued. This is usually a company. RTO registration cannot be transferred to a new company or any other entity. As a buyer, you must purchase the RTO and its operating company and transfer its sharehold.
Any buyer who is not an existing RTO must apply for registration as an RTO and be approved by ASQA before commencing operations.
Following an RTO's sale and shareholder change, the buyer must demonstrate ongoing compliance with all regulations and requirements. This will likely include a compliance audit undertaken on behalf of ASQA and at a cost to the buyer.
As a vendor selling to another RTO or as a buyer merging operations with another RTO, you must ensure that the new RTO’s registration scope covers all RTO courses that will be merged. To continue delivering any qualifications that are not covered in the scope of the existing registration, prompt application to ASQA is essential.
Preparing your RTO for Sale
As the existing owner of an RTO, you’ll understand that it is amongst your most valuable assets. As such, you need to nurture it whether you intend to sell or not. If the time comes that you are ready to sell, there are ways to enhance the saleability of your RTO and ensure the business:
Delivers good cash flow
Simplifies operations
Has easily accessible records
You Must:
Document All Key Relationships – Every business has key relationships intrinsic to its success. All agreements with clients, contractors, and suppliers should be documented in writing; this helps strengthen your business for buyer confidence.
Update Financial Records – These must be comprehensive and up-to-date to demonstrate viability and profitability. This means monitoring, assessing, and managing your business’s performance, producing monthly profit reports; ensuring payments to suppliers are always made on time; and collecting all payments due from clients promptly. Track missed invoices and identify your sources of highest profit.
Simplify Operations – streamline your processes so buyers can quickly and easily take over your RTO. Policies and procedures should all be documented in writing with procedure manuals. Outsource tasks wherever possible.
RTO Intelligence Can Help
When buying (or selling) an RTO, due diligence is key. Seek professional, expert advice from reputable financial, legal, and RTO advisors. Find comprehensive information about your role and responsibilities here.
RTO Intelligence offers professional, expert advice and support on all aspects of registered training organisations, from set-up to audits, compliance, and much more. Contact us now.