To some, an RTO due diligence audit when purchasing a Registered Training Organization (RTO) may seem time-consuming, a waste of energy, and sometimes complicated. However, the time spent now will ensure a successful acquisition. These audits help you understand so much more about what you are interested in acquiring, including financial statements, operational procedures, and regulatory compliance of the RTO.
Understanding the Purpose of Due Diligence
Before diving into the process, it’s important to grasp the purpose of due diligence. It involves a systematic examination of a business’s records and operations to evaluate its quality, compliance, and efficiency.
For an RTO, this means assessing the business you intend to purchase and looking at areas such as:
- Regulatory Compliance – Ensuring the RTO adheres to the standards and regulations, and the scope of operations.
- Governance – Evaluating and ensuring there are no hidden non-compliances or illegal operations that you may inherit and which you will be responsible for.
- Training Programs – Reviewing the training programs offered, the strategies, teaching methods, and any accreditation of courses offered.
- Systems – Policies and procedures and their compliance with the standards.
- Student Support Services – Assessing the support provided to students, such as counseling, career guidance, and academic assistance. Including reviewing complaints and appeals.
- Graduate Outcomes – Analysing the success rate of graduates.
How to Conduct Due Diligence
When considering purchasing an RTO, it’s advisable to engage an expert in RTO due diligence to minimise risks. A due diligence audit is an internal assessment of a business’s readiness to be sold. It aims to identify potential problems and issues that may arise during the acquisition process.
Professional RTO consultants can assist you in conducting this audit to ensure that you’re well-informed before making a purchase decision. And because regulatory bodies have the power to take action against non-compliant organisations, including suspending or cancelling their registration.
Steps to Perform Due Diligence on a Private Company
To perform due diligence on a private company, follow a structured approach:
- Understand the financial health and potential of the RTO.
- Understand the educational sector and the specific niche of the RTO.
- Assess how the RTO stands in comparison to its competitors.
- Look into the RTO’s longevity and resilience in the market.
- Look into the compliance matters
- Consider if you can add to scope in the immediate future
- Examine the efficiency of existing revenue generation and management.
- Consider how the RTO will integrate with your existing operations post-acquisition.
- Verify the assets owned by the RTO, including property, equipment, and intellectual property.
- Check for any legal issues, including ongoing or past litigation.
- Assess relationships with key stakeholders.
Other aspects to consider
Identifying legal and financial risks associated with the acquisition. When due diligence is conducted against these risks, a detailed report on the company’s assets and operations, can help you make informed investment decisions and mitigate risks.
Essential to move forward
When acquiring an RTO or changing a Registered Training Organisation’s ownership, due diligence is important. By thoroughly conducting due diligence, you can uncover critical information that will help you make an informed decision about purchasing an RTO. Allocating resources to this process now is far more effective than dealing with problems later. This approach helps identify potential risks and ensures that the acquisition aligns with your strategic goals and objectives.
RTO Mentor help you to ensure you’ve taken the right steps to reduce your risk and make the change a beneficial one. With the conclusion of the audit, we will provide you with a comprehensive report on what we have found and contrive prudent methods to preclude any shortcomings in the future. We further assist with the smooth transfer of ownership forms and complete submission of forms to the regulator.
