Union businesses

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August 03, 2022

by a searcher from Harvard University - Harvard Business School in Alexandria, VA, USA

Do searchers ever acquire businesses with union labor? Obviously the labor dynamics would be a challenge, but I come across them at a huge discount because nobody wants to buy them. Is this a missed opportunity, or is there a reason nobody wants to buy them?

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Reply by a searcher
from Harvard University in Fort Wayne, IN, USA
There’s a reason they are cheap. Happy to chat. Union shops dramatically complicate operations (can’t hire, fire, swap roles, grow or shrink lines at will) and growth efforts (new hires have to go thru the union process, launching a new shop in a new location will be required to be a union shop also).


Looks like you’re a West Pointer. A union shop will be the furthest thing from what you experienced with your soldiers. Where soldiers (mostly ;) follow orders and execute, and private sector employees mostly do what you ask if properly incentivized and supported, union employees (at the encouragement of union leadership) do only what is in their very strict job description and not a single thing more unless you go thru a union job description review process (and pay them more for every little thing).

I’m painting with a broad brush, and most union folks are great, but union leadership is antagonistic at best and openly hostile if anything goes sideways. And plenty of non-union shops have terrible cultures, but at least you can come in a make changes to the culture and people in a non-union shop.

The deal would need to be less than half of market value before I’d even think about it. If you like the industry, figure out who their (non-union) competitors are and go make offers for their businesses. Owners will be impressed with your knowledge and Army background, and you might find a great, off-market deal for a discount (and no union issues). And then you can buy the heavily discounted business for their customer list and bring the work over to the non-union facility.
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Reply by a searcher
from Northwestern University in New York, NY, USA
Great comments from Jeff above. I would just add that not all unions are the same. I've come across a couple of companies where the unions are pretty benign/friendly and only exist because thats how its been done. If you read the fine print, some of them don't restrict hiring / firing and compensation. From a deal perspective, you may end up getting a lower multiple because of the attached stigma. I wouldn't say these are the norm but can't paint all with the same brush.....
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