Holding Company

Rae

We are a small non-union construction company in PA. We have our WBE/MBE designation with many governmental agencies in various states. We are exploring the idea of setting up another company which would be union so we may bid on more projects that are strictly union projects.

It was suggested to us to set up a holding company, which would hold the union and non-union companies.

I am looking for more information regarding this structure related to the construction industry. Would any of you fine folk have any suggestions as to where I may find more information on the "holding company" structure, or have any experiences you would be willing to share.

Any help would be greatly appreciated.

Bob Kovacs

I'd get a hold of the signatory agreement of the union you plan on being a part of, and find out what the restrictions are. In some cases, even though your union co would be "owned" by a holding company, if they found out that you were an officer of the union co, and also of a non-union co, you'd have problems- believe me, you're not the first one to try and play the "we're owned by a holding company" game to skirt the union/non-union issues. It's not as easy to be double-breasted as you might think.

BTW- it's very rare for public jobs to be "strictly union" as you stated- they're generally "prevailing wage". That doesn't require you to go union, but it will introduce an entire new category of payroll, as well as extra payroll reporting, etc. That might be an option for you that will have far less heartache.

Bob

concretemasonry

Was the "someone" qualified to give the advice or just somebody?

WBE & MBE requirements have limitations and disclure requirements because of the "end-runs" attempted through the years. A holding company could cause a cancellation of the WBE and MBE designationations.

My suggestion is to find a professional that is familiar with the designations and ownership requirements.

__________________
Dick

Engineer, designer and consultant recently active domestically and internationally on construction and design in about 35 countries.

Mike Finley

I have considered a holding company to accomplish what I intend to do (nothing to do with unions)

Regardless of the union issues, there are several pros and cons of using a holding company vs 2 separate companies. Some of the issues are liability protection, how profits are handled tax wise, economy of scale and many others.

When I was considering this, I approached my accountant with the issue and let her evaluate the pros and cons and give me a report on them. It came out to be a toss up.

AintNoFun

We do 90% public/prevailing work. The problem we are running into now is that the unions are really cracking down on Union GC's that use non union subs. So the GC aren't even bothering dealing with non union companies because they dont want the headaches.. We should be a full union company within another week or two or we'd be out of business, am im not doing private work!

KillerToiletSpider

Try that in Chicago, your job will be picketed by every union trade on the job after a day.

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A flush is better than a full house.

Bob Kovacs

Well, the OP is in eastern PA- not Chicago- and it's done every day in his area.

Bob

Rae

Thank you for all your responses. It gives me something to think about.

It was suggested to us as a possiblity by the legal service of an association we have a membership with.

Thank you again for your time and input.

Rae