Buyer Archives - Page 2 of 2 - Infinity Business Brokers

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?

Posted on September 14, 2022April 18, 2026 by Thrive

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.