Author: Thrive
Why is a RTO a non-depreciating asset?
This commentary examines why a Registered Training Organisation (RTO) is often treated as a non-depreciating asset within valuation and transaction analysis. It is particularly relevant for RTO owners considering a sale, buyers assessing downside risk, and advisers involved in valuation, structuring and due diligence.
The concept matters because many RTO discussions focus narrowly on short-term profitability or current cash flow. While those elements are important, they do not fully explain why RTOs continue to hold base value over time, even through market cycles, regulatory change and periods of reduced trading activity.
Understanding how non-depreciating asset value works helps frame more realistic pricing expectations, more balanced risk assessments and more informed decision-making on both sides of a transaction.
What is meant by a non-depreciating asset?
A non-depreciating asset is an asset that does not automatically lose value simply because time passes. Unlike plant, equipment or vehicles, there is no accounting or commercial assumption that its value steadily erodes year by year.
An RTO, as an entity, fits this definition. While components within an RTO may depreciate or fluctuate — such as course relevance, student cohorts, client contracts or registration duration — the RTO itself retains an underlying base value that does not mechanically decline over time.
This distinction is critical. It explains why RTO valuation cannot be reduced to a single year’s earnings or a snapshot of current enrolments. The registration itself, the regulatory standing and the barriers to entry create a form of enduring value that must be considered separately from operational performance.
Components that change versus the asset itself
Certain elements of an RTO are inherently dynamic:
- Length of ASQA registration
- Scope of registration and training packages
- Student lifecycle and completion timing
- Client tenure and contract length
These factors can improve or deteriorate depending on management decisions, compliance outcomes and market conditions. However, changes in these areas do not negate the existence of the underlying non-depreciating asset.
The RTO registration, governance framework and regulatory approvals form a structural asset. That structure retains value unless it is actively damaged through non-compliance, neglect or regulatory sanction.
Market evidence over time
Market behaviour provides clear evidence of this principle.
Historically, a shell RTO traded at materially lower price points than it does today. Over a six-year period, base pricing for shell RTOs increased despite regulatory tightening and increased scrutiny. That increase did not occur because shell RTOs suddenly became more profitable. It occurred because the difficulty, cost and time required to create one increased, reinforcing its underlying asset value.
Similarly, funded RTOs have demonstrated price stability over extended periods. In some cases, the sale price of an RTO with a state funding contract has remained broadly unchanged over several years, even as trading conditions shifted. This stability reinforces the idea that value is being underpinned by more than just annual earnings.
How value can increase or decrease without “depreciating”
While the asset itself does not depreciate by default, its market value can still move based on owner behaviour and strategic decisions.
Examples of value improvement include:
- Extending registration length through successful re-registration
- Adding scope in a controlled and compliant manner
- Improving audit history and compliance confidence
- Increasing capacity or delivery flexibility
Conversely, value can reduce where registration length runs down or where no effort is made to maintain or enhance the RTO. Importantly, even in those cases, the asset often remains worth more than it was many years earlier, reinforcing the non-depreciating nature of the base structure.
CRICOS providers and additional barriers to entry
CRICOS-approved RTOs provide a particularly clear illustration of non-depreciating asset value.
Although the international education market contracted sharply during COVID and has not returned to pre-pandemic pricing levels, CRICOS RTOs still carry a substantial base value. This is driven by:
- Higher regulatory thresholds
- Longer approval timeframes
- Physical infrastructure requirements, including compliant premises
- Increased compliance and reporting obligations
Even when trading conditions soften, these barriers to entry sustain a core level of value. Pricing adjusts for risk and market conditions, but the underlying asset does not disappear.
Benchmark starting points for non-depreciating asset value
Based on observed market behaviour, indicative starting points for non-depreciating asset value have emerged:
- Shell RTOs: base value from approximately $120,000
- Funded RTOs: base value from approximately $350,000, subject to state and contract profile
- CRICOS RTOs: base value from approximately $450,000, subject to registration, scope, location and capacity
These figures are not guarantees or fixed prices. They represent market-observed baselines that exist independently of short-term trading performance.
Interaction with EBITDA and earnings
The non-depreciating asset value becomes less dominant as operating performance increases.
Where an RTO generates substantial EBITDA, valuation focus naturally shifts toward earnings-based methodologies. A practical rule applied in valuation is that when EBITDA approximates the non-depreciating asset value, the two are not simply added together. Doing so would overstate value and conflict with fair-pricing principles.
Instead, the asset value provides a downside floor, while earnings drive upside. This avoids double-counting and ensures valuations remain commercially defensible.
Practical implications for vendors and buyers
For vendors, this concept reinforces why an RTO should not be priced solely on recent trading volatility. Temporary softness does not automatically erase structural value.
For buyers, the non-depreciating asset provides a degree of downside protection. While no acquisition is risk-free, the likelihood of total capital loss is materially reduced where an enduring regulatory asset underpins the business.
For advisers, excluding non-depreciating asset value from analysis would be a significant omission. It fails to reflect how the market actually behaves and how risk is priced in real transactions.
Optional next step
If you would like to discuss how non-depreciating asset value applies to your specific RTO, acquisition strategy or valuation context, you are welcome to book a confidential discussion to explore the implications in more detail.
What we do for our Vendors
This discussion explains, in practical terms, what Infinity Business Brokers does for RTO vendors before, during and after a sale. It is particularly relevant for RTO owners who are considering an exit and want to understand what genuine specialist support looks like in a compliance-heavy, high-risk transaction environment.
The topic matters because selling an RTO is not a standard business sale. Funding contracts, regulatory risk, due diligence complexity and buyer capability all influence value and deal certainty. Many vendors only appreciate this after the process has already become stressful, expensive or stalled.
The commentary is grounded in lived experience, including selling an RTO personally and then refining a sale process over many years of specialist transactions. The focus is not on promotion, but on explaining how risk is reduced and outcomes are stabilised for vendors.
Selling an RTO requires specialist support
A recurring theme is the risk vendors face when working with advisers who do not live and breathe RTOs. Even brokers who have completed a handful of RTO transactions may lack a deep understanding of funding mechanics, audit sensitivity and buyer suitability.
This lack of nuance often translates into vendor anxiety, mismanaged expectations and preventable issues emerging late in the transaction. Infinity’s approach is shaped by first-hand experience of this problem and is designed to remove uncertainty for the vendor rather than add to it.
Fee structure aligned to outcome, not process
A key structural decision is the removal of marketing, advertising, administration and listing fees. Infinity carries these costs and only receives commission once the business is sold.
The reasoning is simple. If a broker claims to be partnering with a vendor through the entire process, taking money upfront before the work is complete undermines that position. Aligning fees entirely to completion creates shared risk and reinforces accountability.
For vendors, this reduces early cash outlay and signals confidence in the sale strategy rather than reliance on sunk costs.
Front-end work that prevents back-end problems
A significant amount of effort is undertaken before a business ever reaches contract stage. This includes:
- Preparing and managing the term sheet
- Pre-qualifying buyers from an established buyer pool
- Filtering out non-genuine parties before they reach the vendor
- Clearly mapping the transaction pathway for both parties
With a large and actively managed buyer database, buyer expectations are shaped early. This avoids time spent with parties who lack funding capability, sector understanding or commitment.
Roadmaps are used to explain each step of the transaction, giving vendors visibility and reducing uncertainty. This also helps buyers understand what is required of them and when.
Due diligence and legal documentation clarity
Vendors are provided with clear, staged due diligence instructions so they understand exactly what information is required, in what order and for what purpose. This avoids last-minute data scrambles and reduces professional fees.
A tried and tested share sale agreement is also made available. Having been used extensively, it reflects real-world RTO transactions rather than theoretical drafting. For vendors, this can materially reduce legal costs and negotiation friction while still allowing buyer-specific adjustments where required.
Integrated professional networks
RTO sales require coordinated input from solicitors, accountants and compliance advisers. Infinity maintains working relationships with professionals who understand the pace and pressure of transactions and who are accessible when issues arise.
This matters in practice. Delays often occur not because of complexity, but because advisers are unavailable or unfamiliar with RTO-specific issues. Timely access to the right expertise keeps momentum intact and reduces stress for the vendor.
Vendor time and stress protection
All buyer discussions are handled pre-sale and post-sale. This removes the need for vendors to field repetitive questions, manage sensitive conversations or negotiate directly.
The outcome is not just efficiency but emotional insulation. Vendors can continue running their business while the transaction is managed around them rather than through them.
A process refined through repetition
The sale process has been refined over many years and numerous completed transactions. Importantly, it is informed not just by successful outcomes, but by understanding where deals typically fail and intervening early.
The emphasis is on preventing objections rather than reacting to them. This includes anticipating funding concerns, compliance questions and buyer capability issues before they crystallise into deal blockers.
Practical interpretation for RTO vendors
For an RTO vendor, this approach means fewer surprises, clearer expectations and a lower personal burden during the sale. It also means decisions are made earlier, when they are cheaper and easier to resolve.
Rather than relying on optimism, the process is built around foresight, structure and sector-specific experience. That combination is what underpins a high conversion rate from agreed terms to completed transactions.
Next step
If you would like to discuss how this process applies to your specific RTO, you are welcome to book a confidential conversation to explore your situation in more detail.
All Things Legal When Buying or Selling a RTO!
Buying or selling a Registered Training Organisation is unlike the sale of most other small or mid-market businesses. The regulatory environment, licensing framework and funding overlays mean that standard asset-sale thinking does not apply. This discussion explores the legal mechanics that sit behind RTO transactions and why specialist advice is critical.
In this conversation, Travis Latter from Infinity Business Brokers is joined by Ben Cohen, a specialist education lawyer with deep experience in RTO, CRICOS and higher education transactions. Together, they unpack how RTO sales actually work in practice.
This topic is particularly relevant in the current market, where buyer demand remains strong but scrutiny around compliance, funding continuity and historical liabilities has increased. Understanding the legal framework early can materially reduce deal risk, cost and time to completion.
Why RTOs are sold by share sale only
The non-transferable nature of an RTO licence
A fundamental legal principle governs all RTO transactions: an RTO itself cannot be sold. The registration is personal to the licensed entity. Because the licence is issued to a specific body corporate, it cannot be transferred as an asset.
As a result, the only lawful way to sell an RTO is via a share sale, where the shares in the licensed company are transferred to a purchaser. This applies equally to RTOs, CRICOS providers and higher education entities.
From a buyer’s perspective, this means acquiring the company with its full history — including contracts, liabilities, compliance posture and funding relationships. From a vendor’s perspective, it means preparation and structure matter far more than in a typical business sale.
Structural issues that commonly delay or derail sales
Trustee structures and sale friction
One of the most common issues seen in RTO sales is where the licensed company also acts as trustee of a trust. While this structure may be tax-effective during operation, it can materially complicate a sale.
When a buyer acquires shares in a trustee company, they are also stepping into trustee obligations and historical trust exposure. This can make buyers hesitant and lenders reluctant, or require pre-sale restructuring.
In these situations, restructuring is often required so the licence-holding entity is no longer acting as trustee. Importantly, the right solution depends on whether the trust is discretionary, unit-based or family-controlled. There is no one-size-fits-all fix.
When legal advice should enter the process
Timing matters more than most vendors expect
A recurring theme in RTO transactions is that legal advice is often sought too late. Vendors may spend months working with a broker to find a buyer, only to discover structural or funding obstacles once the deal is already agreed in principle.
The practical guidance is clear: legal advice should be engaged at the heads of agreement stage, or earlier if funding or trust structures are involved. Early legal input allows issues to be resolved before they become commercial roadblocks.
This becomes even more important where government funding is involved, as additional approvals, consents and timing constraints will apply.
Choosing the right structure for the long term
Balancing operational efficiency and exit planning
There is no universally “best” ownership structure for an RTO. The right structure depends on business size, growth plans, tax position and exit horizon.
Smaller owner-operated RTOs often benefit from discretionary trust ownership of shares, allowing flexibility and tax efficiency during operation. Larger groups or multi-RTO portfolios may instead favour unit trust or holding-company structures to facilitate partial exits or staged divestments.
The key insight is that structure decisions made early can significantly affect saleability later. Five-year planning matters just as much as current tax efficiency.
The role of lawyers on both sides of the transaction
Protecting buyers from hidden risk
From a buyer’s perspective, legal representation is essential. Share sales expose purchasers to historical liabilities under corporations law, employment law, property law and taxation.
The lawyer’s role is not simply document preparation. It is to ensure the buyer is acquiring exactly what they believe they are buying, without inheriting unknown or avoidable risk. This includes due diligence support and careful allocation of risk through warranties and indemnities.
Vendor-side legal support and transition
On the vendor side, legal work is often about enabling a clean and dignified exit. Many RTO owners have spent years building their organisation, and the legal process should support a smooth transition rather than introduce friction or delay.
Commerciality, efficiency and clarity are recurring themes in successful vendor-side transactions.
Improving speed, cost and deal outcomes
Early collaboration between advisers
One of the most practical insights discussed is the value of early communication between buyer and vendor lawyers, facilitated by the broker. Addressing key concerns before drafting begins can materially reduce legal costs and negotiation time.
In practice, this approach leads to fewer surprises, faster completion and a more cooperative transaction environment.
Realistic timeframes
In rare cases, unfunded RTO sales between highly motivated parties have completed in days. However, most transactions take two to three weeks from term sheet to completion, excluding funding approvals.
Where government funding is involved, additional statutory waiting periods apply, typically around 30 days, with some state-based variation. These periods can be used productively to finalise leases, employment matters and operational transitions.
What specialist education lawyers do – and do not – cover
Clear role boundaries improve outcomes
An important distinction is made between legal work and regulatory compliance. While education lawyers manage share transfers, contracts and risk allocation, they typically do not perform compliance audits or student file reviews.
Specialist RTO consultants are better placed to undertake those reviews in a more cost-effective and operationally relevant way. The strongest transactions occur when accountants, lawyers, consultants and brokers each operate within their core expertise, in a coordinated manner.
Practical interpretation for buyers and vendors
For vendors, the key takeaway is that sale preparation is not just financial. Structure, compliance narrative and legal readiness all influence value and buyer confidence.
For buyers, the message is equally clear: share sales require careful legal protection. Specialist advice can prevent the assumption of legacy risk that may not be visible from financials alone.
Across both sides, the broker plays a central coordinating role, maintaining momentum and communication while aligning professional advisers toward a shared outcome.
Next step
If you would like to discuss how these legal considerations apply to your specific RTO, transaction structure or growth strategy, you are welcome to book a confidential discussion with the Infinity team.
Can I get funding to purchase a RTO?
This discussion explores one of the most common and misunderstood questions in the Australian RTO transaction market: can a buyer actually secure funding to purchase an RTO? The conversation brings together Infinity Business Brokers and specialist finance adviser Grono Group, represented by Rami Farjou, to unpack how lenders currently assess RTO acquisitions.
The content is particularly relevant for prospective RTO buyers, vendors preparing their business for sale, and advisers supporting transactions in the education sector. Funding remains a critical gating issue in most RTO sales, and misunderstanding lender expectations is one of the leading causes of delays and failed deals.
Importantly, this discussion reflects what is happening on the ground in the post-COVID lending environment, rather than theoretical funding models.
The lending environment for RTO acquisitions
Why the RTO sector has historically been challenging
The RTO sector has experienced periods of heightened lender caution, particularly following the collapse of several large education groups and increased regulatory scrutiny. This risk sensitivity was compounded by COVID-19, which disrupted enrolments, international student flows, cash collection cycles and overall revenue certainty.
From a lender’s perspective, education businesses sit at the intersection of compliance risk, revenue timing risk and reputational exposure. As a result, RTO funding has never been treated as a simple “business loan” category.
Signs of improvement in lender appetite
Despite these challenges, lender sentiment toward education businesses has improved. According to Grono Group’s experience, performance across the education sector has stabilised and strengthened, particularly through recent quarters, supported by broader economic recovery and clearer financial reporting standards.
However, this improvement does not mean banks are less cautious. Rather, they are more selective and more analytical.
There is no “standard” funding amount
A key insight from the discussion is that there is no fixed funding threshold or standard loan size that banks are comfortable with. Each RTO transaction is assessed on its own merits.
Lenders are no longer focused solely on profitability. Instead, they assess a combination of interrelated factors, including:
- The quality and sustainability of earnings
- Cash flow strength and predictability
- Receivables ageing and collection risk
- Revenue concentration and student mix
- Balance sheet strength
- Security and risk mitigation
- The buyer’s experience and capacity to operate the RTO
This is why two RTOs with similar headline profits can receive very different funding outcomes.
Financial quality matters more than profit alone
Clean financials are non-negotiable
One of the strongest messages for buyers and vendors alike is that financial presentation matters. Lenders expect:
- Three years of accountant-prepared financial statements
- Up-to-date ATO portal records with no undisclosed liabilities
- A clear and credible balance sheet
- Transparent treatment of receivables, liabilities and cash flow timing
For RTOs, this is particularly important given issues such as prepaid fees, staged course delivery and delayed collections from certain student cohorts.
Receivables and cash flow scrutiny
Receivables are examined closely. Lenders want to understand:
- How quickly students pay
- Whether outstanding amounts are genuinely collectible
- Whether historic receivables reflect students who may not return or complete
Poor receivables quality can materially weaken an otherwise profitable RTO in the eyes of a lender.
Buyer preparation before seeking finance
What buyers should have ready
Before approaching a finance adviser or lender, buyers are expected to have their own affairs in order. This typically includes:
- Personal and business financial statements
- Evidence of asset and liability position
- A clear understanding of serviceability
- A concise CV or bio outlining relevant experience
- Disclosure of any existing businesses or assets
Where buyers already operate businesses, these can sometimes support the acquisition by strengthening security or serviceability.
Business plans and projections add weight
While not always mandatory, a clear business plan and forward projections significantly improve funding outcomes. Lenders want to understand not just what is being bought, but how it will be run and how performance will be sustained or improved.
Share sales and lender risk
RTO transactions are almost always structured as share sales. This introduces additional lender considerations, including:
- Historical compliance and reputational risk
- Potential undisclosed liabilities
- Ongoing regulatory exposure
This is why strong legal documentation, warranties and professional due diligence are essential. Lenders expect these risks to be clearly identified and appropriately managed before funding is finalised.
Timing expectations and deal realism
Typical funding timeframes
Even with good preparation, RTO funding is not instantaneous. Indicative timeframes discussed include:
- 2–4 weeks to obtain indicative terms
- A further 2–4 weeks for formal approval and documentation
In practice, buyers should expect a 6–8 week process, with the understanding that complexity or incomplete information can extend this further.
How buyers can shorten the process
The most effective way to reduce timeframes is preparation and full disclosure. When information is complete, accurate and consistent, lenders can move more quickly and with greater confidence.
Deal structuring and funding flexibility
The discussion also highlights that funding does not need to be binary. Depending on circumstances, transactions may involve:
- Partial bank funding
- Existing equity release
- Vendor finance components
- Structured “subject to finance” arrangements
While these structures must be handled carefully to protect all parties, they can materially improve transaction viability when aligned with sound legal and commercial advice.
Practical interpretation for buyers and vendors
For buyers, the message is clear: funding is achievable, but only with realistic expectations, strong preparation and a clear operating plan.
For vendors, the takeaway is equally important. A well-prepared RTO with clean financials, transparent risks and sensible deal structure is far more likely to transact successfully — not because buyers want it more, but because lenders will support it.
Funding is not an afterthought in an RTO sale. It is a central pillar of deal execution.
Optional next step
If you would like to discuss how funding considerations may apply to your specific RTO acquisition or sale scenario, you are welcome to book a confidential discussion with the appropriate advisers.