Analyzing Successor Employer Labor Obligations in Asset Purchase Transactions

Post By: Andrew T. Frost

Buyers often purchase the assets of a business rather than purchase the stock of the business in order to avoid the seller’s liabilities. Some buyers believe this shields them from any obligation to recognize the union that represented the seller’s employees. This is not necessarily the case, and such buyers may be unwittingly acquiring unwanted labor obligations, including union recognition and collective bargaining. Potential buyers should carefully analyze the facts and circumstances of an asset purchase transaction to determine if the deal will trigger labor obligations for the buyer. The following are scenarios that will cause a buyer to acquire labor obligations as part of an asset purchase transaction. Continue reading

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