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Tip for Investors: Don't Lock Out Unionized Targets

By Thomas G. Spencer and Philip E. Garber

There's something about the idea of dealing with unions that just plain intimidates investors. Maybe it's from watching “On the Waterfront” one too many times. Both financial and strategic investors often instinctively reject the idea of acquiring unionized companies. This can be a mistake. Although companies with unions may have higher operating costs and other challenges, buyers should not reflexively write them off as acquisition candidates. Healthy, unionized enterprises can turn out to be excellent investments ' often better than the nonunion businesses that initially seem like the better deal. The key is analyzing them correctly.

When considering the acquisition of a unionized business, it's essential to know what should not drive the acquisition decision. Prior experiences from projects involving unionized companies, negative anecdotes from peers, or horror stories in the press should not be the deciding factor on whether to further investigate a unionized opportunity. Instead, buyer's counsel should consider each opportunity logically, rationally and systematically, regardless of the nature of the deal or the client's role in it.

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