EBITDA stands for Earnings Before Interest, Taxes, Depreciation and Amortisation, is a widely used measure of a company’s operating performance. It’s particularly useful for assessing the profitability of a company before the impact of financial and accounting decisions—making it a popular metric in various industries, including Registered Training Organisations (RTOs).
For an RTO, EBITDA can be particularly telling as it highlights the core profitability of the educational services provided, excluding the effects of financial structure, tax rates, and large non-cash accounting items like depreciation of educational equipment or amortisation of intangible assets. Here’s how EBITDA relates to an RTO in a practical sense:
When using EBITDA, it’s also important to remember its limitations—it doesn’t account for cash needed to replace depreciating assets.
Amortisation is the accounting process of gradually writing off the initial cost of an intangible asset over its useful life. This helps in spreading the expense of the asset over several years, reflecting its consumption and utility over that period.
Amortisation in a Registered Training Organisation (RTO) typically involves the systematic write-off of intangible assets over their useful life. Intangible assets in an RTO could include a variety of items that provide value over multiple years but aren’t physical in nature. Here are some examples:
There is no cost to buyers for using our services unless specifically engaged as a buyer’s agent – more about that later. Our fees are typically charged to the seller, ensuring that our interests align with delivering the best possible outcome.
We stand behind our vast expertise, experience, and industry knowledge and operate on a success-based fee structure. This means our payment is contingent upon the successful transaction of the property—ensuring we only succeed when our clients do. This aligns with our pillars of transparency and integrity and keeps our focus on achieving results.
Additionally, we manage all associated costs such as advertising, marketing, administration, and listing. We journey alongside both vendor and buyer, guiding each step towards the successful completion of the sale, ensuring a seamless process for all parties involved. This approach not only exemplifies our dedication to superior service but also reinforces our foundational pillars within every transaction we handle.
We use over 80 factors to determine the current value of the RTO. Instead of me listing them all here, here are two videos that tackle this question.
This does not apply to all RTO as a starting statement. It DOES apply to RTO that are shell RTO or CRICOS. It also applies to RTO with funding. Here is a video that goes into detail.
We take a process driven approach and as we are industry specialists we take the time and effort to educate the vendor on the current market conditions.
In short, we use the exact same process for valuing the RTO to the vendor as we do when discussing it with the buyer – No games, no gimmicks, no “meeting in the middle”. Our job revolves around education and not as much negotiation.
Ensuring the price of a RTO is fair and information provided is accurate and truthful is central to our existence. Here’s how we maintain our standards of integrity, transparency, and superior knowledge:
We are super proud that we will save you time and money during due diligence as we see our role in due diligence as basically going to work for you. Our vast industry experience will be your friend. We are unlike other brokers that sit in the corner of the vendor and do not move, we conduct almost forensic due diligence BEFORE we take on a listing and this means we can and will assist you.
There are normally 4 parts to the DD process.
Legal – Who owns the shares, structures, leases, etc
Financial – Validation of accounts provided
Compliance – Internal audits, external audits, History
Operational – How is the business run on a daily/weekly basis
There are many steps involved and the key to know is we have your back throughout the process and importantly, we have clearly defined processes for the purchase of a your new RTO.
Here are two videos discussing the two stages in the RTO buying process.
Your stress-free guide to buying a RTO
Your stress-free guide to buying a RTO (Part 2)
As you go through the process, we will answer all questions not covered in the videos.
When the time is right – Absolutely!
Meeting the vendor is an essential steps in our process. We ensure these interactions are highly efficient and informative. Before you meet with the vendor, we’ll provide you with all the necessary details about the business to verify the information firsthand. This approach is designed to maximise the value of your time and make the meeting as productive as possible.
Sometimes though, these meetings are not needed if it is a simple shell transaction but we are always ready to have the meeting if required.
During the meeting, normally on zoom, a member of our experienced Infinity team will moderate the meeting. Our presence adds significant value, as we bring a deep understanding of both the buyer’s and the vendor’s perspectives, along with extensive industry knowledge.
This critical phase of the process is often where potential deals are most vulnerable.
By actively facilitating these meetings, we aim to address and resolve any issues that might arise, thereby smoothing the path towards a successful transaction.
This hands-on approach not only helps prevent the deal from falling through but also moves us closer to completing the sale, ensuring all parties are satisfied and fully informed throughout the process.
The ownership of the RTO does not change. Let me explain….
The company owns the RTO registration so it will be a Share Sale Agreement.
The RTO is and asset of the company, just as the website, bank account, resources, funding, staff, etc are assets of the company. We are not actually selling the RTO we are transacting on the shares of the company, the assets of the company and the assets of the business. This means the only change is to director and shareholders.
Therefore, the basis of change is the “Fit and Proper Person” check.
The “order of events” is as follows:
If state funding is involved, this is the necessary first step.
Once the funding changeover is confirmed (and we use this as a condition precedent to settlement” the next change is at ASIC level. This is the settlement as shares are transferred to the buyer.
The buyer then has 90- days to advise ASQA of the material change.
The only difference is if the business is a CRICOS business, we notify them on the morning of settlement.
We will have your back through the process and our vast experience means we have a good idea of how to transact the sale in the most seamless way.
We have a range of consultants that can work with you across all states to add to scope, change locations, apply for CRICOS, complete Financial viability reports and more. We are proud of our Infinity network to ensure you are always treated with professionalism.
ASQA has moved to a fee-for-service model. The cost to add to the scope can be found here: https://www.asqa.gov.au/about/fees-and-charges/guide.
If you use the guide of $3000 per qualification you will not have any surprises.
Technically they can however they are almost like two different businesses. Different TAS, different attendance, different compliance. My suggestion is to focus on one of them and then add the second.
Yes we do offer Buyer’s Agent Services to acquire a RTO or CRICOS or Higher Education business.
If you know your target industry sector or state, we can act for you to be in the position to understand the opportunities.
We assist individuals or companies by providing guidance, market analysis, and transactional support.
As a guide this service costs between $5,000 and $10,000. Please contact us for further information and guidance.
Travis Latter has refined his knowledge of the RTO industry after starting his own RTO, holding CEO roles with National and International Training Organisations, becoming Acquisitions Manager for an ASX listed company, consulting to over 350 RTOs & Training Organisations and successfully brokering over $135M in RTO Sales.
This experience and dedication provides him with the ability to work closely with all industry stakeholders to ensure successful transactions happen in the optimum time-frames, with the best results.
Travis understands the needs of vendors and purchasers alike and with sharp business acumen and a wealth of business experience Travis guarantees to deliver service based on integrity, commitment and energy.
FOR FULL UNDERSTANDING PLEASE VISIT WWW.INFINITYBUSINESSBROKERS.COM.AU
Expertise, Qualifications and Memberships
We are very transparent on the associated costs. We only get paid when the vendor gets paid and as such we are happy to back our experience, knowledge and expertise.
Business brokers typically earn a commission based on the successful sale of a business. The commission is usually a percentage of the total transaction value, and the specific percentage can vary based on factors such as the size and complexity of the deal.
We charge nothing at the front end as we work as the partner in the transaction.
As a rough guide:
Businesses valued under $2,000,000 = 10%
Businesses valued between $2M and $3m = 8%
Businesses valued between $3M and $5M = 6%
Businesses valued between $5M and $8M = 5%
Businesses over $5M = 4%
A vendor said to me once, “That is a lot” and the reply was “It is a lot of work”. Here is a link to give you comfort of what we will do for you.
Typically, we do not produce IM for each business. There are six reasons for this.
1.I found most IM I’ve read a full of broker fluffery that doesn’t give any significant data.
We will always provide an Executive summary.
The simple answer is YES (with a few ‘IFs attached)
IF we do our job right in valuation than yes. This is crucial and as Infinity value every business, instead of the vendor, we can benchmark each business against everything else in the education sector we have sold over the last 8 years.
IF the vendor is equally transparent then – yes.
IF the data we receive is current, accurate and explained then – yes.
IF timeframes are realistic. We will always explain the current market conditions noting the Education industry changes or pivots roughly every 3 months.
IF the vendors expectations match market realities then – yes.
We have over 8000 registered RTO buyers so we know if the above are considered then the answer to the question is a big fat – YES!
This is hardest question to answer because I am not the buyer. Our experience shows, if we get the above right and follow our processes we will achieve the result with the highest price, in the least amount of time with the best terms.
There are many factors that will contribute to the timing.
Normally within 7 days from being advertised we are receiving enquiries.
We then filter out those not suitable because they are not ready to buy and we go to work with the buyers.
YES and NO. We have sold over 140 RTO, CRICOS and Higher ED over 8 years so there is very little we have not seen. BUT, every RTO is different and we appreciate the nuances in the industry. We can promise one thing – We will have your back throughout the whole sale timeline.
Yes, we are very proud of our work and every single word in our testimonials comes from the exact words of our buyers and sellers. The common thread would be our experience, integrity, knowledge and patience.
We prefer to go through the appraisal WITHOUT knowing what you think the business is worth as we prefer to use market data when valuing an education business. It is important to strike a balance between vendor expectations and what the market will realistically support. Our experience will assess your desired price against our market analysis and provide you with a recommendation that maximises your outcomes while keeping expectations realistic. This approach ensures transparency and aligns with our commitment to integrity in our dealings.
We are not in to “putting a price on it and seeing what happens” (and you should be wary of this unsophisticated price. We rely on empirical data and concrete market data to value your educational business.
We set the price based on a deep understanding of the market, incorporating extensive data analysis and industry insights. Our goal is to ensure your business is positioned competitively while achieving the best possible return.
We factor in the unique aspects of your business, current market conditions, and comparable sales.
By aligning our pricing strategy with these elements, we aim to attract serious buyers and secure a successful sale.
The answer to this is when you are sale ready.
Looking at the 135 Educational businesses we have sold, only 4% of these were totally sales ready. This totally blew me away when I analysed it.
By not being sale ready we immediately lessen the chances of achieving our ‘Holy Grail’ of the three focus points we search for:
Therefore, the worst time to sell is when you really, really are desperate to sell. Preparation wins all the time!
Can I get funding to buy a RTO?
Yes, you can get funding to buy a Registered Training Organisation (RTO) in Australia.
The funding options primarily include commercial loans from banks, vendor finance where the seller provides the funding terms, investments from private equity if it’s a larger scale acquisition, or potentially using personal capital for self-funding. Each of these methods has different implications for control and financial commitment, so it’s essential to carefully consider which option aligns best with your financial situation and business goals.
That being said, as there are no fixed assets normally, banks will lend up to 50% at best.
Here is a link to a video with a lending specialist
Why should I use a business broker?
Selling an education business can be an extremely time consuming process. It is essential to have the right team in place to assist you along the way. Employing a broker to assist with the preparation of the business for sale and throughout the sale process will free up the owner to continuing doing what they do best and that is the day to day operation of the business. Your broker can work with your accountant and legal team to save you both time and money throughout the process.
A Broker will be able to give you an objective valuation of your business and will also be able to provide you with a clear picture of the current market. A Broker will also have the ability to match your business with targeted buyers.
We do NOT charge an advertising fees or marketing fees. We do not charge a listing fee either. Why? We believe in getting the right result so we only charge a commission based on the sale price. We appreciate some other generic brokers may have a lower commission however, the service we provide is far greater and the value we provide is measurable.
Please take a look at our website, www.infinitybusinessbrokers.com.au to learn about us. Here you can also see recent testimonials from satisfied clients. They always are our best advertisement!
As we do not take anything upfront, we want to know we are working hard in the view we will get paid when we get the result. To be honest, finding the buyer is the easy part, getting you safely to the finish line is where the skill set comes in and something we are proud of. It is for these reasons, we tend to only do Exclusive Agreements.
I understand this may not work for everyone. We have found the only time something goes amiss is when we do not follow our detailed processes. As such we do prefer to always follow the tried, tested, and trusted processes.
We work closely with legal professionals and regulatory bodies to ensure all aspects of the transaction comply with Australian laws and regulations. This includes adherence to ASQA standards for RTO sales.
Our post-sale support includes assisting with the transition process, providing guidance on operational handover, and offering strategic advice to ensure a smooth transition for both the buyer and seller.
Yes, we understand the importance of confidentiality. We take measures to protect your identity and business information throughout the sale process, disclosing details only to qualified and serious buyers who have signed confidentiality agreements.
Feel free to contact us directly via phone, email, or our website contact form. Our team is always ready to assist with any additional questions or provide further information as needed.