The Untapped Potential of Black Business Mergers: A Path to Economic Empowerment
Despite growing interest in economic collaboration, one high-impact strategy remains notably underutilized in the Black business ecosystem: strategic mergers between Black-owned businesses.
While major corporations regularly join forces to scale operations and dominate markets, small and medium-sized Black-owned businesses rarely pursue this approach—often due to systemic barriers rather than lack of opportunity.
However, successful mergers in banking and tech prove that combining forces can unlock new levels of growth, competitiveness, and wealth creation.
This article explores the benefits, challenges, and real-world examples of Black business mergers while highlighting recent developments that could pave the way for more collaboration in the future.
Success Stories: When Black Business Mergers Worked
Several success stories highlight the potential of Black business mergers:
Banking Sector Growth: The 2021 merger between City First Bank and Broadway Financial Corporation created the largest Black-led bank in the United States, with over $1 billion in assets. This combination enhanced their ability to serve their community while offering more sophisticated financial products.
Financial Institution Strengthening: The 2018 merger between Atlanta-based Citizens Trust Bank and First Citizens Bank & Trust Company created another significant Black-owned financial institution, strengthening their competitive position in the banking sector.
Edtech and AI Innovation: In April 2023, Black-owned company Stemuli announced the merger of Infinity.careers and Oppti2, bringing together Black founders to create a more powerful entity in the AI-driven education and workforce development space.
Structural Opportunities for Modern Mergers
Several sectors appear particularly ripe for Black business mergers:
- Professional Services: Law firms and accounting practices could combine to compete for larger corporate clients while maintaining their cultural competency and community connections.
- Food and Beverage: Independent restaurants and food manufacturers could merge to create stronger brands, share kitchen facilities, and increase bargaining power with suppliers.
- Technology Services: Small Black-owned IT consulting firms could merge to bid on larger government and corporate contracts that require substantial staff and diverse technical capabilities.
- Beauty and Retail: With the rapid growth in Black-owned businesses, particularly those owned by Black women, there’s significant potential for mergers in these sectors.
- Edtech and AI: The Stemuli merger highlights the opportunity for Black-owned companies in emerging sectors to join forces and build market leadership.
Why Haven’t We Seen More Mergers?
Several factors have historically limited Black business mergers:
- Access to Capital: Merger transactions require significant capital, and Black entrepreneurs have historically faced discrimination in lending and venture capital.
- Limited Merger & Acquisition Expertise: Many Black business owners haven’t had access to networks of M&A professionals who understand both the technical aspects of mergers and the unique considerations of Black-owned businesses.
- Trust and Control: Given the historical significance of Black business ownership, some entrepreneurs are understandably hesitant to give up full control of enterprises they’ve built from scratch.
- Valuation Challenges: Systemic inequities often lead to undervaluation of Black-owned businesses, making it difficult to structure fair merger terms.
A Path Forward
To facilitate more successful Black business mergers, access to capital remains crucial. Lendistry, a Shoppe Black partner, offers business acquisition loans and other financing solutions that can help Black entrepreneurs fund strategic mergers and scale their businesses. The ability to secure capital for mergers will be a key driver in unlocking the untapped potential of Black business consolidation.
Need Capital to Buy or Grow a Business?
Whether you’re a current business owner looking to scale through a merger or an aspiring entrepreneur wanting to acquire a business, Lendistry can help.
Learn more about eligibility and funding options here.
Tony O. Lawson
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