Labor: 7 ways a company can protect its rights when working with a union contract

Strategies for the prospective purchaser when acquiring a business with a union contract

Buyer’s remorse often sets in when a purchaser realizes that a newly acquired business or facility comes equipped with a union contract that makes it both difficult and expensive to operate in the manner the purchaser anticipated. Frustration deepens when the purchaser realizes that it may take years and an uphill battle before meaningful changes can be made to the collective bargaining relationship. However, these types of situations can be substantially less cumbersome if the purchaser takes some simple steps prior to closing a deal. Below are the top seven ways a prospective purchaser can protect its right to begin operations on the most favorable labor and employment terms possible:

1. Consider the labor and employment aspects of the deal

5. Evaluate the seller’s union contract before closing, and tailor it to your needs as employer

Does the seller’s union contract contain significant restrictions on the right to conduct business in the most efficient and economical way possible? Restrictions on the ability to change, relocate, subcontract or discontinue operations may end up being more costly than direct labor costs. Analysis of the existing contract must be performed not from the vantage point of how the seller operated under that agreement but through the lens of how the purchaser intends to operate. Major changes essential to the success of the purchaser’s business are best achieved before closing.

Contributing Author

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Howard Bernstein

Neal Gerber & Eisenberg Partner Howard L. Bernstein represents employers throughout the U.S. in labor relations and employment law matters and employment-related litigation, with...

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