Selling a Unionized Trucking Company: What the Buyer Didn't Know

The situation

Hodan started out as a security guard working overnight shifts at a Richmond Hill industrial park. Amina drove long-haul routes for a freight carrier. They met through a mutual contact, pooled their savings, and bought a used truck. Over the next two decades that single truck became a company with a small fleet, a roster of long-haul drivers, and a separate division that placed unionized security guards at warehouses and depots across the region. By the time they decided to sell, the business employed roughly sixty-five people and was generating enough revenue that a private buyer group, represented by David, offered to purchase it for a price in the neighbourhood of $11 million.

Hodan and Amina had never sold a business before. They had built it employee by employee, and their instinct was to treat the sale the way they had always run the company — carefully, and with an eye on what happened to the people who worked for them. That instinct turned out to matter more than they expected.

What due diligence found

David's group proposed an asset purchase — buying the trucks, the client contracts, the depot leases and the goodwill of the business, rather than buying the shares of the corporation itself. Asset purchases are common in mid-market deals because they let a buyer choose which liabilities to take on and which to leave behind. David's team had modelled the deal on the assumption that they could restructure the workforce after closing: consolidate routes, renegotiate a few driver contracts, and bring the security guard division's staffing model in line with how they ran their other portfolio companies.

That assumption ran into a problem during our review of the company's labour arrangements. The security guard division's employees were unionized, and the collective agreement — the contract between the employer and the union setting out wages, job security and working conditions — included a successorship clause and a provision protecting the positions of employees with long tenure. More importantly, Ontario's Labour Relations Act, 1995 generally binds a purchaser to an existing collective agreement when it acquires a business, or part of a business, and continues to operate it in substantially the same form. This protection does not depend on how the deal is papered. Structuring a transaction as an asset purchase does not, on its own, let a buyer walk away from a collective agreement if the buyer is effectively carrying on the same operation with largely the same workforce.

David's counsel had assumed an asset purchase would give their client a freer hand with the workforce. It would not. Whatever the paperwork said, if the security guard division kept doing the same work for the same clients under new ownership, the union relationship was very likely coming with it. The gap between what the buyer had priced into their offer and what Ontario labour law actually permitted was significant, and it surfaced with the closing timeline already circulating between the two sides.

What we did

1. Reviewed the collective agreement and flagged the exposure early. We read the agreement in full rather than relying on a summary, and identified the successorship language, the renewal terms, and the tenure-based job protections before the buyer's team raised any of it. Surfacing the issue from our side, before it looked like a concealed problem, kept the conversation cooperative rather than adversarial.
2. Advised Hodan and Amina on realistic outcomes. We explained plainly that no deal structure would let the buyer avoid the union relationship if the business kept operating as it had. The honest range of outcomes ran from the buyer accepting the collective agreement as-is, to a repriced deal reflecting the restructuring flexibility the buyer would lose, to the buyer walking away. We did not promise a specific number or a guaranteed close.
3. Recommended a share purchase instead of an asset purchase. Once it was clear the collective agreement would bind the buyer either way, a share purchase — where the buyer acquires the corporation itself, including all its existing contracts and obligations by operation of law — gave both sides more certainty than an asset purchase dressed up to look like a clean break. It also simplified the transfer of the depot leases and several long-term client contracts that would otherwise have needed individual consent to assign.
4. Negotiated a price adjustment tied to the labour risk. With the buyer's restructuring plans off the table for the security division, we negotiated a modest reduction to the purchase price, from the roughly $11 million originally discussed down to about $10.1 million, reflecting the value the buyer had assumed it could unlock through workforce changes it could no longer make quickly.
5. Set up an escrow holdback for grievance risk. Rather than debate hypothetical labour disputes indefinitely, we agreed to hold back roughly $350,000 of the purchase price in escrow for eighteen months, available to cover any grievances or arbitration costs arising from the transition. This let both sides stop arguing about a risk that was real but not yet quantifiable, and move the deal forward.
6. Coordinated directly with the buyer's counsel on transition terms. We negotiated specific commitments about how existing driver routes and guard postings would be handled in the first year after closing, giving Hodan and Amina confidence that the employees they had spent years training would not be dismissed the week after the sale closed.

The outcome

The sale closed as a share purchase at roughly $10.1 million, about $900,000 below the price first discussed, with $350,000 held in escrow against labour-related claims for eighteen months. Neither side got everything it wanted. Hodan and Amina accepted a lower headline price than they had hoped for when they first engaged David's group. David's buyer group accepted that the security guard division's collective agreement, and the job security it provided to longer-tenured employees, would carry forward largely intact, at least for the period covered by the transition terms.

What both sides avoided was worse: a deal that collapsed after months of negotiation, or a closing that led to grievances and arbitration claims within the first year because the buyer's restructuring plans ran headlong into a collective agreement nobody had priced correctly. The escrow arrangement expired without a claim against it, and the security guard division continued operating under its existing agreement through its next scheduled renewal.

For Hodan and Amina, the deal was not the outcome they had originally imagined, but it was one they described as fair once they understood what was actually on the table. They had built the company partly by keeping good people in stable jobs for years at a time. A structure that protected those jobs through the transition, even at a reduced price, sat better with them than a higher number that would have unwound the thing they had spent twenty years building.

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