Does anyone have experience buying a unionized business?

June 21, 2023

by a searcher from University of Chicago in Chicago, IL, USA

How do lenders / SBA view such deals? Investors? If you purchased a unionized business, were there any significant obstacles during fundraising? Post-acquisition, what is like managing day-to-day operations?

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Reply by a searcher
from Southern Illinois University at Edwardsville in Laramie, WY, USA

I was part of a company for 16 years where we had both union and non-union operations. Many of your nationwide construction firms operate this way. It is complex but doable. I don't think I would recommend it for an acquisition. It is just another layer complicating operations after the transaction is complete. You will have plenty of other things to worry about.

Reply by an investor
from The University of Chicago in Chicago, IL, USA

You need to first understand if the target is a party to a multi-employer pension plan - i.e. a situation where its employees receive benefits that are provided under a benefit program(s) that encompasses other union employees that are not employees of the target. In these circumstances, the target cannot withdraw from the benefit plan unless it pays its share of the entire unfunded liability, if any, that pertains to ALL employers in the plan. This circumstance is most typically a dead knell for the potential transaction. Much to discuss here but keep in mind that your valuation requires a discount. The buyer population for a union target is narrower than non-union targets regardless of the value, if any, of the union.

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