STRUCTURING YOUR RTO FOR SALE

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STRUCTURING YOUR RTO FOR SALE
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Too often owners approach us to assist in
selling RTO only to find that the business is
not saleable. Not only because its 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.
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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 itbecause 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.
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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.
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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.
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Contact Info AddressBroker Support Centre,
Suite 104, Bermuda Point, 20 Lake Orr Drive.
Varsity Lakes, QLD 4227 Australia Phone
number1300 366 521 (toll-free)61 7 5562 2711
(international)07 5562 2744 (fax) E-mailadmin_at_b
enchmarkbusiness.com.au