The demise of Acquire: How the 'big dogs' in education lost their bite

It was 2014 and business was booming at education group Acquire Learning & Careers.

Closely advised by former AFL boss and Acquire minority shareholder Andrew Demetriou, the group’s co-founders set their sights on taking their firm to the big time.

Acquire Learning Group managing director John Wall (left) and advisory board member Andrew Demetriou.Credit: Patrick Scala

An internal memo in May that year from group managing director John Wall outlined an audacious plan to turn Acquire into a college-owning behemoth with a $30 billion value to rival the likes of Telstra or Macquarie Group.

At Acquire there was no lack of confidence. Emails started with “Lads” and the directors and shareholders including “Uncle Andy” Demetriou were described as “the boys” who attended “big dog” meetings. Yet Wall's memo hinted at internal concerns about the sustainability of its business.

"In the next 12 months we need to move to a position where we are enrolling 10,000 people a month, where 2000 per month are getting jobs at an average yield of $10,000 generating $100m a month, or $1.2 billion, a year at 80 per cent profit," his note said.

"Is it sustainable. I’m not sure we need to worry about that – if we can do the above numbers and make $400m a year for the next couple of years then it doesn’t need to be sustainable. Of course along the way we can acquire sustainable assets to diversify risk."

Lads … Let’s make some serious money

A line from a note believed by liquidators to be from co-founder John Wall

Wall’s note cheerfully concluded: "Lads … Let’s make some serious money."

At the heart of the Acquire business was a noisy call centre in the leafy Melbourne suburb of Hawthorn. Here pop tunes were played loud to encourage sales staff to flog online diploma courses at vocational colleges to job seekers.

And so they did, but not for long. Acquire Learning went from raking in hundreds of millions of dollars a year to collapsing into administration on May 12, 2017 owing its creditors, including the federal government, $147 million and stranding tens of thousands of students attending its colleges.

Before its collapse, Acquire was also accused by the Australian Competition and Consumer Commission of high-pressure sales tactics as it fined the group $4.5 million.

Jesse Sahely in 2015 when Acquire Learning was booming. Credit:

For the past two weeks, liquidators led by Barry Wight at Cor Cordis have been conducting public examinations in the Supreme Court of Victoria into the collapse of the group. Last week, Andrew Demetriou, whose nephew Tim Demetriou was a co-founder of Acquire, gave evidence. Ex-director and co-founder Jesse Sahely gave evidence this week.

The court heard senior executives at the group repeatedly warned the directors and shareholders in the second half of 2016 of the potential personal criminal liability to directors and officers of the group if they knowingly traded while insolvent.

Now liquidators believe the group was potentially trading while insolvent for 10 months before its collapse and potentially illegally incurred $22 million in debts over that period.

On Wednesday, Sahely faced questions about the warnings and the more than $2 million in shareholder loans he received from the company - loans he says were really dividend payments from the good times. All up, $30 million in loans would be made to shareholders and to a venture far removed from the education sector – a horse racing media company called G1X.

Students looking at a VET machine where money goes in. Vocational education players are under scrutiny and controversies are mounting. Illustration: Simon BoschCredit:

Gillard government spur

Acquire’s success story began in 2012 as an education broker operating in a sector that was booming after the Gillard government’s 2012 reforms allowing for HECs-style loans for diploma courses.

As government money flowed into the vocation education sector after 2012, Acquire eyed the big-time. It bought several colleges that got millions in funding from the student loans – often more than $30,000 per student – issued by the government as it sought to boost participation in vocational courses.

"The money was literally pouring into the business back in 2014 and 2015," said a well-placed source close the company.

Questions about Andrew Demetriou, who was paid $900,000 a year by Acquire, are key to investigations. Demetriou was never listed as a director of the company and says he was not involved in the daily operations of the group, though agrees he was chairman of the advisory board.

Demetriou told The Age and the Sydney Morning Herald this week that media briefing documents for Acquire posted online that refer to him as “executive chairman” were incorrect.

Demetriou was also chairman of Acquire’s 90 per cent owned subsidiary CareerOne between March 2015 and December 2016.

On May 11, 2017, the day before Acquire went under, CareerOne told the regulator of Demetriou’s resignation nearly five months earlier – presumably the result of tardy paperwork amid a torrid time for the greater Acquire group.

Demetriou did not respond to questions about the timing of this filing, though he would not be responsible for filing the document and it is common for private companies to file documents months after a change of company details.

The court heard Demetriou was loaned about $1.7 million in 2014 to buy shares in Acquire. This loan was "repaid" through discretionary bonuses.

Sahely explained this week that the group’s fortunes dived and it was on the verge of collapse after a crackdown by the government on the vocational education sector.

He told the court the group believed a deal with Careers Australia, a cost-cutting program and improved student services and enrolments would see Acquire come back from the financial brink.

"We did a lot of things … to basically save the business," he said.

But his memory was hazy when grilled by barrister for liquidators Damien McAloon over a $830,000 withdrawal he made from his account ahead of his wife purchasing a luxury Armadale mansion in 2014 for nearly $5 million.

A mansion the Tax Office believes, according to court documents, was purchased using a loan from Acquire.

As he struggled to name what he spent the money on, McAloon offered: "It’s $830,000, it could go a long way."

"After my wife purchased the house, we were going to do a renovation so there was a whole heap of money spent on that, a whole heap of money spent on overseas travel," he said.

"Plus," he added, "I had a rather expensive lifestyle then."

The examinations will continue as liquidators pick through the wreckage of Acquire.

Next week a whole new chapter in the Acquire Learning saga will be written when Wall takes to the stand to explain the $10 million-plus in loans granted to his sporting startups EON Sports Radio and G1X.