In Short
- Confirm the business is properly registered and that employees have the correct qualifications for the services offered.
- Make sure the location is zoned appropriately and supports your plans for future growth.
- Conduct thorough legal and financial due diligence to avoid unexpected liabilities.
Tips for Businesses
Before buying an education or training business, check its legal status, employee certifications, and premises zoning. Review all contracts, licences, and financial records carefully with your lawyer or accountant to avoid surprises and ensure the business is fit for purpose.
Buying an existing education or training business is a fantastic way to translate your industry experience and business savvy into an exciting and lucrative new venture. Buying an existing business allows you to get right into managing and operating a business, enabling you to capitalise on and build upon existing successes. However, there are several considerations to consider before buying an education or training business. This article will guide you through three key considerations: the registration and qualification requirements your business and employees will need, zoning regulations, and the due diligence you must undertake before making a purchase.
Registration and Qualifications
Before purchasing an education or training business, ensure that the business and its employees possess the required certifications mandated by law.
Registration of the Business
As with any business purchase, check that the seller has registered the business under the correct legal structure. For example, if a Sole Trader operates the business, confirm they hold an ABN and have registered for GST. If the business is a limited partnership, verify that the owner registered it with the relevant State or Territory government. If it is a limited liability company, confirm that the owner registered it with ASIC.
Employee Qualifications
Depending on the type of educational or training business you plan to buy, the employees you will be taking on will need particular qualifications. They include:
- all employees working with children in an unsupervised manner will need to have a working with vulnerable people certification;
- teachers working with preschool or kindergarten students will require diploma-level teaching or early childhood education qualifications;
- teachers who work with primary school students require a Bachelor of Education degree;
- teachers who work with secondary school students require a Master of Teaching degree; and
- for industry-specific training businesses, your instructors may require industry-specific qualifications depending on the industry. For example, instructors teaching at a culinary school will require qualifications in the culinary arts.
Zoning
A decisive factor in a business’ success is its location. Particularly in the education space, the right location is crucial in ensuring that your business is visible, accessible, and has adequate facilities to enable your students to flourish.
However, zoning is one crucial factor to consider before buying a business in a particular location. Zoning laws regulate the use of specific locations or premises. Ensure the business you are buying operates in a location with suitable zoning. If you plan to expand your business or offer additional services, verify whether the zoning permits such growth.
Continue reading this article below the formDue Diligence
Due diligence is the process of conducting thorough research into the finances and affairs of a business you intend to acquire. Conducting due diligence is essential when purchasing a financially and legally sound business, as it helps ensure you avoid inheriting challenging financial or legal surprises in the future.
As part of the due diligence process that you should conduct before buying an education or training business, you should check:
- the validity of any leases;
- the validity of any licences or permits;
- which assets the business owns and which assets the seller will transfer to you.;
- what debts has the business incurred – depending on the business’ structure, it may be necessary to pay these debts even after you have acquired it;
- tax returns;
- records of accounts receivable and payable;
- cash flow statements; and
- business activity statements.
You should bring all of these documents to your accountant or lawyer so that they can thoroughly check for any inaccuracies or discrepancies before you buy the business.
Before buying a business, it is important to undertake due diligence, to verify the information supplied by the seller. This guide will walk you through the due diligence process.
Key Takeaways
Before you purchase an education or training business, consider a few key factors:
- confirm that the business is properly registered and that its employees hold the required qualifications;
- check that the location has appropriate zoning and that the zoning allows you to grow the business as planned; and
- conduct thorough due diligence into the business’s financial and legal affairs.
If you need help managing the legal aspects of buying an education or training business, our experienced education and training lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 1300 544 755 or visit our membership page.
Frequently Asked Questions
It depends on the type of business. For example, if the business is a registered training organisation (RTO), it must be approved by ASQA. Similarly, if it offers childcare services, you may need approval under state or territory laws. Always confirm regulatory requirements before completing the purchase.
Yes, but you must ensure the new premises are appropriately zoned for educational or training use. You may also need to notify or seek approval from relevant regulators, landlords, or local councils before moving or expanding the business.
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