Private equity firms took notice when the State Group, a multi-trade contracting company, went up for sale in 2017. Owned by a family office and employing electricians, plumbers, pipe fitters, carpenters, and other skilled tradespeople for large projects, the State Group clearly had growth potential—especially in a moment when companies and governments across North America were investing heavily in energy infrastructure and manufacturing.
But it wasn’t going to be a straightforward transaction. The State Group worked with unionized tradespeople in Canada and the U.S., and its roughly 600 employees had retirement savings spread across many multi-employer pension funds, some of which were critically underfunded. A new owner of The State Group would be exposed to gaps in funding for the retirement of its unionized employees, but the company had not kept records on these pension obligations, meaning that potential buyers could not predict their liabilities. One by one, the suitors dropped out—until Adam Blumenthal ’89, the founder, co-managing partner, and chairman of Blue Wolf Capital, was the only one left at the table.
Blumenthal understood that the demographics of the skilled trades made the State Group a valuable opportunity: More people are aging out of these professions than entering them, even as demand remains high, making their labor more scarce and more valuable. He also understood that the company’s success depended on its ability to retain and collaborate with a skilled and unionized workforce. A new owner’s ability—or lack thereof—to fulfill previous pension commitments would set the tone for the State Group’s future.
Before acquiring the company, Blue Wolf began the months-long process of requesting and sorting through payroll records to clean up the pension records. After painstakingly reviewing thousands of payroll documents, the firm found that the State Group had contributed to over 100 pension funds. Blumenthal and his colleagues secured a commitment from the existing owner to backstop one of the most problematic plans. They also created a risk management framework to monitor exposure to underfunded plans. The agreement secured funding for employees’ retirement without eliminating any jobs, creating a solid working relationship with unions and workers that facilitated the company’s expansion. The State Group has since grown fivefold, employing over 3,000 people today. (Blue Wolf retains a minority stake in the firm, but the majority was sold to an energy transition fund managed by the Apollo Group in 2024.)
The private equity industry is often criticized for extractive practices—for putting short-term profits ahead of the needs of workers and other stakeholders. Blumenthal has put collaborative relationships with organized labor at the center of a principled approach to investment. He argues that, while the unionized workforce is shrinking—a result of offshoring and aging demographics—demand for the goods and services provided by skilled tradespeople, like those working at the State Group, is only growing. If union labor and the skills to manage a unionized workforce become more valuable, then working well with unions is both an ethical imperative and an attractive business proposition.
“America needs way more skilled tradespeople than it has, and we’re very fortunate to have built a company that specializes in employing them,” he says. “Because it’s us and they know it’s going to be a safe, well-managed workforce, and people’s benefits are going to be paid and we’re going to take care of our employees, we get great people.”
Growing up in a Manhattan housing cooperative built to house members of the International Ladies Garment Workers Union in the 1950s, Blumenthal was immersed in organized labor from an early age. Like others of his generation, he was formed by the civil rights and anti-war movements, both important topics of conversation in his family. By the time he arrived at Harvard in 1979, he says, “My heart was more in trying to engage with the kinds of community issues that I was surrounded by than it was in going to class.”
After his freshman year, he left college and worked as a community organizer for four years in several U.S. cities before returning to finish his degree in Social Studies. At one point, he worked with public housing residents in Bridgeport, Connecticut, when the city was attempting to privatize a large complex and give ownership to the renters. While it seemed like a good deal on paper, Blumenthal suspected that high utility and operational costs would redound to the residents’ detriment.
He tallied up the total annual rent rolls and compared the numbers to the fuel bill for heating the complex through a cold New England winter. “Despite the lack of a business school education at the time, I could see that what they paid for rent wouldn’t cover one year’s worth of heating bills,” he recalls. “Having that little bit of financial analysis provided the ammunition that allowed the community group to prevail. It was an example of using some basic skills to have an impact on a community political situation.”
At SOM, Blumenthal honed his thinking in courses with operations expert Art Swersey, economist Sharon Oster, and accounting scholar Rick Antle. He especially appreciated the signature SOM course Individual and Group Behavior, in which students learned to reconcile the perspectives of stakeholders with very different motivations. “I knew a lot about stopping poorly designed public policy from being implemented,” he says. “I was very interested in learning how to run an organization so that you get the outcomes you intend and have the impact that you want.”
As a new SOM graduate, Blumenthal helped start an investment company, American Capital, that focused on small businesses, employee-owned firms, and companies that allocated stock to employees. American Capital eventually went public and raised about $1 billion for companies that often can’t easily access capital. He also spent time in the public sector, overseeing the $65 billion New York City pension system after the 9/11 terrorist attacks shook markets and caused major financial losses for the city’s public servants.
In 2005, Blumenthal and Josh Wolf-Powers created Blue Wolf Capital, a play on their last names, to test his thesis that adept management and problem-solving could unlock value for workers and for investors. Blumenthal was especially interested in opportunities with complexities—including relationships with organized labor—that other investors might shy away from, like the one offered by the State Group.
“The idea dated back to the original reasons that I went to SOM,” he says. “There are challenges in navigating businesses that have a lot of involvement with unions, or have government involvement, or large workforces. Most of the private equity industry tends to overlook these businesses, but we have a lot of experience with industries with both union and government exposure.”
Blue Wolf partner Bennet Grill, who joined the firm in 2012, says that Blumenthal distinguished himself in the sector with his appetite for tackling complex problems with many stakeholders. “The strategy Adam set out was, ‘Let’s dig in more. We have a lot of relationships and experience in this space. This is a problem we can solve, and it’s going to take a few months, but let’s get to the bottom of it,’” Grill recalls.
“Whether you want a solar array or a wind array or a battery plant or a data center, they all need electricians. Real people have to build that infrastructure—real people with real jobs and real calluses on their hands and real technical education and skills.”
One of the first projects on which Grill and Blumenthal collaborated was Twin Rivers Paper Company, which Blue Wolf had acquired from another large institutional investor. The previous owner hadn’t invested in the right machinery and equipment, and the firm had failed to pivot its business to areas where demand was starting to grow. At the same time, the company’s collective bargaining agreements with several United Steelworkers locals and the Canadian Energy and Paperworkers Union had expired, and relationships between the prior owner and the unions had become acrimonious.
“Things had started to break down. Production levels were lower, quality suffered, and the business wasn’t generating much profit at all,” Grill recalls. To pivot away from office paper to more lucrative opportunities producing packaging, Blumenthal needed to repair relations with workers and ensure the business was competitive from a labor-cost perspective.
While negotiating new labor agreements with the company’s unions, Blue Wolf agreed that it would invest additional money to fund pension payments for employees who opted to retire early. Working together, the firm and the unions managed to create a sustainable level of employment in an equitable manner. “It created a business that has grown and sustained itself when it was on the brink of liquidation,” Grill says. “Thirteen years later, it remains a critical employer in the northern Maine and southern New Brunswick region. That’s probably the single most rewarding experience I’ve had at Blue Wolf.”
As Blumenthal’s hunch about working with organized labor paid off, he came to understand that in industries where skill and safety are paramount, unionization is not a threat to profitability but rather its enabler. The International Brotherhood of Electrical Workers (IBEW), he argues, provides the best training program for electricians in North America, producing exactly the kind of professional on which Blue Wolf’s companies rely to grow and flourish. “It’s part of why the State Group has been able to thrive as a union employer,” Blumenthal says. “The IBEW does an outstanding job training the workforce through its apprenticeship and recruiting programs, and the same holds true across the building trades.”
Now Blue Wolf has become the firm that investment bankers know they can call when no one else is up for the task. “We go to investment bankers all the time and say, ‘You know that company that you’ve tried to sell to 10 people, and nobody wants it? You should tell us about that,’” Blumenthal says.
Blue Wolf’s history of working well with organized labor has become one of the firm’s major assets. During the State Group deal, the unions representing the company’s workers knew Blue Wolf’s reputation, which created trust and helped support the company’s growth into new geographies. And key choices during the acquisition backed up that reputation. Mike Lampert, who took over as CEO of the State Group shortly after Blue Wolf acquired it, remembered his 90-minute job interview with Blumenthal as unusual for its almost-exclusive focus on how Lampert planned to treat the people he was being hired to manage.
“Probably 5, no more than 10 minutes were about numbers and business strategy,” Lampert recalls. “He wanted to talk about people, culture, and safety. We spent more than 90% of that interview on making sure that my commitment to safety and treating people with dignity and respect was at the core of my business and personal approach.”
Following the recent acquisition of an infrastructure services firm in Canada, Blue Wolf has worked with its entirely non-union employee base to certify with an organized labor group. “We know the benefits of having apprenticeship training programs, and of having that partnership,” Grill says. “It’s a much better way to operate and grow a company than trying to go at it alone.”
Blumenthal says that this track record has created tremendous opportunities for Blue Wolf and allowed the firm to play an unusual role in supporting a critical sector of the workforce, whose long-term growth is critical to the strength of the American economy. Today, the firm invests in both the healthcare and industrial sectors, and about one-third of workers across its portfolio companies are union members. While much of the corporate sector today is oriented towards the dematerialized world of data, artificial intelligence, and algorithms, Blumenthal has staked his business on the belief that even the most futuristic innovations will require more skilled workers every year.
“Whether you want a solar array or a wind array or a battery plant or a data center, they all need electricians,” he says. “Real people have to build that infrastructure—real people with real jobs and real calluses on their hands and real technical education and skills. Investing in people and human capital, and knowing how to manage the challenges that come with that, is both a source of pride for our team and a source of value for our investors.”
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