Companies that went public and how they’re doing
Which are the top Black-owned businesses in the U.S. today? With many successful businesses privately held—and not required to report detailed information to the SEC—this report focuses on publicly traded companies.
Public vs. Private
Many of the world’s most successful businesses are publicly traded companies, such as Amazon, which originally went public in 1997 and has a net worth of $1,558.11 billion as of Sept. 7, 2020. That said, some very successful companies chose to stay private to avoid the scrutiny and regulations that come with going public. Cargill, for instance, has been in operation and remained private since 1965; as of 2020, the global food corporation has already pulled in $58.2 billion in revenue. Granted, this operational privacy comes at the cost of not being able to sell stock on a public exchange, which could help a company grow even further.
As privately held companies aren’t required to meet the Securities and Exchange Commission’s (SEC) strict filing requirements, it can be difficult to get specific information about a privately held businesses’ success. Public companies, however, must comply with SEC rules; this lets us learn a lot more about them.
In another demonstration of the long-term economic effects of systemic racism, only 637,769 of the 11,710,360 businesses in the United States in April 2020 were Black owned. That’s just 5.45% of businesses. Yet the 44.08 million Black people living in the U.S. at the end of 2019 comprise 13.4% of the total population.
When you get to public companies, the numbers are even smaller: Of the 3,671 public companies in the U.S. reported by The Wall Street Journal in 2017, we found eight Black-owned companies. That comes to 0.002% of public companies.
- Of the 11,710,360 businesses in the United States in April 2020, 637,769 were Black owned.
- Ninety-six percent of Black-owned businesses were nonemployer firms, compared to 80% of all small businesses. Thirty-two percent of Black-owned employer firms were in the healthcare and social services sector.
- Black entrepreneurs face obstacles such as a limited access to startup capital, less managerial and industry experience, and operating in lower-revenue industries
- RLJ Lodging Trust, one of the largest publicly owned Black businesses, reported total assets of $5,92 billion in June 2020.
What Makes a Business Black-Owned?
One complication with classifying the ownership of any public company is that it has stockholders. What makes a public company—or any business—Black-owned? The National Minority Supplier Development Council (NMSDC) defines a minority business enterprise (MBE) as a “business [that] is at least 51% owned by [United States citizens who are Asian, Black, Hispanic, and/or Native American] or, in the case of a publicly owned business, at least 51% of the stock is owned by one or more such individuals.” Simply put, the management and daily operations should be controlled by the minority owner(s)/shareholder(s). The NMSDC further clarifies that a Black-owned business is one whose owner is a “U.S. citizen of African descent,” which would include both African Americans and African immigrants.
“I would make a caveat for a situation where somebody owns less than 51% of the shares, but they were equal partners,” says Shomari Wills, a journalist and the author of Black Fortunes, one of Ebony magazine’s True Read picks of 2018. “Also, I would make a caveat for situations where somebody was a minority stakeholder—not the owner, but they were operating as the managing partner of the company.”
And here are two other terms that help define the market: Based on the most recent U.S. Census Survey of Business Owners, 96% of Black-owned businesses were nonemployer firms, compared to 80% of all small businesses. Nonemployer firms are defined as “businesses that that have no paid employees and are subject to federal income tax.” As these firms are generally small and have minimal economic impact, they are left out of most other Census Bureau business statistics, making it difficult to acquire a full picture of the Black business landscape in the U.S.
The remaining 4% of Black-owned businesses are employer firms. According to the Census Bureau’s Annual Business Survey, 32% of Black-owned employer firms were in the healthcare and social services sector.
“I think [the healthcare and social services sectors] lend themselves to community-based businesses, which have a pretty extensive history…. Providing local services or community-based services is something that goes back all the way to segregation when you couldn’t necessarily go and open a business downtown if you were a Black person, so you had to look at businesses that you could operate within your own community.” Wills explains.
Some of those community-based businesses have grown into major companies: three of the eight top Black-owned public companies we identified are in the healthcare sector.
Particular Challenges Facing Black-Owned Businesses
In 1992, there were 621,912 Black-owned businesses in the U.S. By 2012, that number rose to 2.58 million, before decreasing to over 1.08 million in 2020 (pre-pandemic). Periods of ups and downs are common to all businesses. However, Black entrepreneurs continue to encounter unique obstacles that make it difficult to reach the same level of success as many of their competitors, such as a limited access to startup capital, fewer useful connections, and operating in lower-revenue industries.
Approximately 44% of Black business owners rely on cash to fund their business, compared to 37% for the average small business owner. Cash is a riskier means of financing a business, as it dips into funds also needed for essential items and paying bills, compared to a commercial loan, which allows business owners to retain much of their liquid assets. But getting access to loans isn’t easy.
In 2017, banks were twice as likely to provide business loans to White entrepreneurs than their Black counterparts. Conversely, they were also three times as likely to follow up with White applicants, that with more qualified Black business owners. In 2014, 28.4% of Black entrepreneurs found that their profits were negatively impacted by their access to capital, while 22.6% were themselves negatively impacted by the actual cost of capital.
Black business owners have less access to the types of mentor and peer networks that can help grow a business—and they are less likely to have family connections that can help. In a 2017 survey conducted by Prosperity Now, 23.3% of White firm owners gained prior work experience as part of a family member’s business, compared to 12.6% of Black entrepreneurs.
Black firms are more frequently found in industries with a lower earning potential, including beauty salons, childcare, home healthcare services, janitorial services, and barbershops. And even in these sectors, White businesses still tend to earn more than competing Black-owned businesses.
Meanwhile, Black businesses in more lucrative sections—including physician and mental health offices, plumbing and heating/AC contractors, offices of lawyers, and full-service restaurants—earn less than White counterparts.
Overall, Black-owned firms averaged $58,000 in revenue in 2017; White businesses averaged $546,000.
Publicly Traded Black-Owned Businesses
Amid these challenges—and despite them—some Black-owned businesses have become substantial public companies. Below are some of the biggest publicly traded Black-owned businesses, organized according to total assets.
They operate in a variety of sectors: healthcare, finance, broadcasting, and tech. Two were founded in the 1940s, two in 1979–80, and the rest are 21st-century companies. Two are less than 10 years old.
RLJ Lodging Trust
- Total Assets (June 2020): $5.92 billion
- Total Revenue (June 2020): $298.07 million
- Earnings per Share (June 2020): $(0.95)
- Year Founded: 2000
- Headquarters: Bethesda, Md.
The most successful company listed here, RLJ Lodging Trust (RLJ), is a real estate investment trust with a portfolio consisting of 103 hotels across 23 states and the District of Columbia. Founded by Robert L. Johnson and Thomas J. Baltimore Jr. in 2000 as RLJ Development, RLJ Lodging focuses on “premium-branded, focused-service and compact full-service hotels” in order to capitalize on their upside potential. RLJ wasn’t publicly traded until 2011. In 2017, it completed a merger with FelCor Lodging Trust, allowing it to acquire 37 additional properties. The company’s portfolio includes several well-known brands, such as Courtyard by Marriott, Residence Inn by Marriott, Hilton Garden Inn, Homewood Suites by Hilton, Embassy Suites by Hilton, Hyatt Place, and Wyndham.
- Total Assets (June 2020): $1.21 billion
- Total Revenue (June 2020): $170.88 million
- Earnings per Share (June 2020): $(0.48)
- Year Founded: 1979
- Headquarters: Silver Spring, Md.
Originally founded by Cathy Hughes as Almic Broadcasting in 1979, Radio One started out with just a single station—WOL(AM) in Washington, D.C. In 1987, Radio One added an FM station to its roster—WMMJ, also in Washington, D.C. Twelve years later, Radio One sold its first shares of common stock, making Hughes the first African American woman to head a publicly traded company. Between 1999 and 2000, Radio One purchased an additional 35 radio stations. By the time the company changed its name to Urban One (UONE & UONEK) in 2017, it had expanded into a multimedia conglomerate, with brands including a television network (TV One, launched in 2004), a local and a syndicated radio group (the latter, Reach Media, was acquired in 2005) a digital media company (One Digital, launched in 2007), and a branded content agency (One Solution, created in 2008). It would later add a television-focused digital magazine, CLEO TV, in 2019.
Ping Identity Holding
- Total Assets (June 2020): $971.76 million
- Total Revenue (June 2020): $120.39 million
- Earnings per Share (June 2020): $(0.09)
- Year Founded: 2002
- Headquarters: Denver, Colo.
Founded by Andre Durand in 2002, Ping Identity Holding (PING) specializes in a wide variety of digital and online identity protection services through its trademarked Ping Intelligent Identity platform, including multi-factor authentication, intelligent access controls, and identity data management. Vista Equity Partners bought out the company in 2016 and later took it public in 2019. Ping Identity Holding has an impressive clientele, which includes five of the top retailers, four of the largest healthcare plans, eight of the largest bio-pharmaceutical companies, and all 12 of the largest U.S. banks.
Global Blood Therapeutics
- Total Assets (June 2020): $721.67 million
- Total Revenue (June 2020): $45.62 million
- Earnings per Share (June 2020): $(2.06)
- Year Founded: 2011
- Headquarters: San Francisco, Calif.
According to the Centers for Disease Control and Prevention (CDC), approximately 100,000 Americans are living with sickle cell disease (SCD); one out of every 365 Black children is born with this genetic disorder. Biopharmaceutical company Global Blood Therapeutics (GBT) is leading the charge against SCD by developing several treatments and therapies, in addition to raising awareness and advocating for increased access to care. GBT completed its initial public offering just four years after its founding. GBT’s voxelotor is also the first treatment approved by the FDA to target an underlying cause of SCD. In 2019, GBT partnered with Syros Pharmaceuticals to develop novel therapies for both SCD and Beta Thalassemia, another blood disorder.
- Total Assets (June 2020): $670.67 million
- Total Revenue (June 2020): $4.79 million
- Earnings per Share (June 2020): $(0.22)
- Year Founded: 1948
- Headquarters: New York, N.Y.
Carver Bancorp (CARV) is the holding company for Carver Federal Savings Bank, a federally chartered savings bank. Founded by a group of community leaders and small business owners in 1948, Carver offers consumer and business banking products and services to traditionally underserved African-American communities. The first branch was opened in Harlem in 1949; more than 70 years later, that number has expanded to eight branches and several 24/7 ATM Centers, most of which are in low-to-moderate–income neighborhoods. The U.S. Treasury Department has designated the bank as a Community Development Financial Institution (CDFI), due to its dedication to serving those who would otherwise be locked out of the financial system.
Broadway Financial Corp.
- Total Assets (June 2020): $491.30 million
- Total Revenue (June 2020): $4.57 million
- Earnings per Share (June 2020): $0.01
- Year Founded: 1946
- Headquarters: Los Angeles, Calif.
Much like Carver Bancorp, Broadway Financial Corp. (BYFC) is the holding company for Broadway Federal Bank, another federally chartered savings bank and CDFI. Broadway was founded in 1946 as the Broadway Federal Savings and Loan Association by a group of Los Angeles civic leaders, including real estate broker H.A. Howard and dentist Dr. H. Claude Hudson. The bank didn’t have a proper headquarters until 1954, after acquiring a building on 45th Street and Broadway. On April 30, 1992, during the civil unrest following the Rodney King verdict, the bank’s headquarters was destroyed in a fire; Broadway would immediately announce its plans to rebuild. Three years later, Broadway was converted from a federally chartered mutual savings association to its present form. Since then, the bank has continued to focus on serving low-to-moderate–income communities, offering loan products and numerous deposit products.
- Total Assets (June 2020): $190.99 million
- Total Revenue (June 2020): N/A
- Earnings per Share (June 2020): $(1.37)
- Year Founded: 2012
- Headquarters: New York, N.Y.
The next-largest company in the healthcare sector on this list, Axsome Therapeutics (AXSM), is also a biopharmaceutical firm. Founded in 2012 by Dr. Herriot Tabuteau, Axsome focuses on the development of novel therapies for managing central nervous system (CNS) disorders, for which treatment options are limited. The conditions that Axsome Therapeutics’ products are designed to treat include migraines, narcolepsy, fibromyalgia, Major Depressive Disorder (MDD), and Alzheimer’s Disease-related agitation, in addition to smoking cessation treatment.
American Shared Hospital Services
- Total Assets (June 2020): $53.89 million
- Total Revenue (June 2020): $8.56 million
- Earnings per Share (June 2020): $(0.10)
- Year Founded: 1980
- Headquarters: San Francisco, Calif.
American Shared Hospital Services (AMS) operates within the technological side of the healthcare industry by providing equipment to hospitals and medical centers. Although predecessor and California limited partnership Ernest A. Bates, M.D., Ltd. (d/b/a American Shared Hospital Services) was originally formed in 1980, American Shared Hospital Services wasn’t incorporated until 1983. The company offers several different financing solutions so that medical institutions can afford the state-of-the-art medical technology that might ordinarily be out of their reach. American Shared Hospital Services specializes in leasing radiosurgery, Proton Beam Radiation Therapy, and IMRT/IGRT equipment. Through its GK Financing subsidiary, American Shared Hospital Services is also the worldwide leader in Gamma Knife unit ownership, with the associated financing model having been expanded to incorporate the financing of other technology solutions, such as Intensity Modulated Radiation Therapy (IMRT) and Proton Beam Radiation Therapy (PBRT).
The Bottom Line
If you’re looking for an alternative way to support Black-owned businesses outside of purchasing goods and/or services, consider one of these companies for your portfolio.