Mergers and Acquisitions Can Play a Key Role In Growth and Wealth Creation for Black Small Businesses

Starting and growing a small business is a cornerstone of the American identity. But for Black entrepreneurs, growing a business can be particularly difficult.

As the President and CEO of U.S. Black Chambers, Inc, I have seen and heard firsthand the challenges posed by growth for Black business owners every day. In a May 2022 survey of small business owners done in partnership with Reimagine Mainstreet, nearly 75 percent of Black business owners said it was unlikely they could fund growth opportunities such as hiring new staff or purchasing new equipment or property.

Luckily, mergers and acquisitions offer an alternative pathway to growth for Black entrepreneurs. Mergers and acquisitions refer to the transfer or consolidation of two or more firms under a single company and, since 1985, more than 325,000 mergers and acquisitions transactions have been announced with a value of almost $34.9 billion according to the Institute for Mergers, Acquisitions and Alliances. From my personal experience, mergers and acquisitions can play a key role for Black business owners as a business growth and wealth creation strategy.

Before becoming President and CEO of U.S. Black Chambers, Inc. I took over the family business USA Superclean and grew it from $150,000 in annualized revenue to over $15 million in a decade, becoming the largest Black-owned janitorial firm in the country at the time. The key to this rapid growth was the acquisition of several other janitorial companies that enabled USA Superclean to rapidly increase capacity and scale to meet the opportunity

Following the rapid growth of USA Superclean, we sold the company, which played an important part in creating family wealth. Just as it did for me, mergers and acquisitions can play a key role in wealth creation for Black entrepreneurs. And it’s no secret that Black households face great disparities in household wealth. As of 2019, non-Hispanic white households had a median household wealth of $187,300, compared to $14,100 for Black households according to the U.S. Census.

To be sure, mergers and acquisitions are complicated transactions and entrepreneurs should consult the appropriate legal and financial advisors. Another challenge of mergers and acquisitions can be bringing the firms together to form one culture and business. While USA Superclean was a young, Black, progressive firm, one of its acquisitions was white-owned and utilized older business practices. These cultural differences could have put the business under,
but we were able to slowly create a unified culture through building trust with its leadership and employees and updating their business processes.

The business community has an important role to play in the success of Black entrepreneurs with the mergers and transactions process. Black-owned small businesses need education and resources on the process from sources they trust, including the Small Business Administration, Small Business Development Centers, SCORE, and local chambers to know if it is the right step for their business. The U.S. Black Chambers, Inc. is committed to supporting these organizations in providing information about mergers and acquisitions as a component of their curriculum and equipping Black business owners with the resources they need to understand and engage in the process.

From a policy perspective, we encourage lawmakers and regulators to strengthen and further improve the merger and acquisition ecosystem, ensuring robust opportunities and long-term growth for our business community. In this vein, we continue to offer support for organizations and institutions that seek to advance small business owners’ ability to use mergers and acquisitions as a key tool in their growth or exit strategy.

Mergers and acquisitions can play a critical role in growth and wealth creation for Black small business owners. The business community and policymakers should do their part to help ensure Black entrepreneurs’ success in the process.