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 work daily to address the challenges facing Black businesses, including how our community can build iconic, sustainable, and innovative businesses. Only then can we truly close the wealth gap for Black individuals.?

Unfortunately, Black business owners face historical difficulties accessing the capital they need to start and grow their businesses. A May 2022 survey of small business owners done in partnership with Reimagine Mainstreet found 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. As is often the case, we must source our capital elsewhere.?

One pathway to growth we must continue to tread is leveraging the opportunities of mergers and acquisitions or “M&A” – that is, the transfer or consolidation of two or more firms under a single company. Since 1985, more than 325,000 mergers and acquisitions transactions have been announced with a value of almost $34.9 trillion according to the Institute for Mergers, Acquisitions and Alliances . From my personal experience, these opportunities can play a critical 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 becoming certified through the Small Business Administration’s 8(a) business development program and acquiring several other janitorial companies. Becoming 8(a) certified enabled us to secure several government contracts that significantly increased our revenue and enhanced USA Superclean’s ability to engage in M&A.

Following the rapid growth of USA Superclean, we sold the company, giving my family the kind of financial exit needed to realize actual 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 complex transactions that have implications for businesses and their owners. One challenge can be bringing the firms together to form one culture and business. For example, 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 by building trust with its leadership and employees and updating their business processes.

The business community and policymakers both have an important role to play in the success of Black entrepreneurs with the mergers and transactions process.

To leverage M&A opportunities, USBC is committed to providing Black-owned businesses with the much-needed background, knowledge, and resources associated with these activities. In partnership with the Small Business Administration, USBC is part of the “Community Navigator” program , where we are reaching deep into our community on these kinds of issues. 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 serve as a resource for and offer our expertise to policymakers and the business community that seeks to advance Black small business owners' ability to use mergers and acquisitions in their growth or exit strategies.

Mergers and acquisitions can and must play a critical role in growth and wealth creation for Black business owners. Only when we are building scalable Black businesses, that can mirror the kind of growth my own business had will Black businesses be able to compete in an ever-globalizing economy. USBC will continue to work with policymakers to ensure this important instrument of the market remains available to the more than two million Black-owned businesses we serve.?

About the Author: As President/CEO of the U.S. Black Chambers, Inc. (USBC), Ron Busby, Sr. brings business management skills as well as a lifetime of community development experience to the organization. Mr. Busby is a former successful business owner himself, and he has been recognized as one of the nation’s best CEOs. Ron grew his first company, USA Superclean, from $150,000 annualized revenue to over $15 million in only 10 years. In addition to being an entrepreneur, Ron was a former Chamber leader serving as the Chairman of the Board and then later becoming president of the Greater Phoenix Black Chamber of Commerce.

To learn more about U.S. Black Chambers, Inc. visit https://usblackchambers.org/.