Unionized businesses

May 31, 2022

by a searcher in Chicago, IL, USA

My wife and I are considering acquiring a unionized business. We understand that there are labor law related challenges and would like to know whether any Searchers have had experience in acquiring a Unionized business. Is the juice worth the squeeze? Our main concern other than potential industrial action, is the ability to sell the business after we scale it. Does anyone have any experience in either buying or selling a Unionized business? Please feel free to share your experiences. Thank you.

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

First question - do they have a multi-employer pension plan? If so, walk away. Generally speaking certain business need organized labor to operate (big city environments). No union equates to no location in that market (again business type specific). However, if that is not the circumstance, it all ends up being a burden with no value. Lastly, i.) make sure you personally speak with the union before closing (to see what you are getting involved with) and ii.) do not move ahead if there is not long runway on the existing contract. If the owner(s) are unwilling to allow you access to the union reps prior to closing, walk. My experience includes both ownership and multiple contract negotiations.

Reply by a searcher
from Harvard University in Boston, MA, USA

Looked at a commercial HVAC company that was unionized. In essence they didn't have many/any employees, they just rented the labor from the union. The seller did the estimating/technical aspects, so with them retiring it didn't feel like the business itself was worth any real sort of multiple. My case was pretty specific, but I would.make sure the company has the organizational knowledge and systems vice the union.

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