In its first purchase under Project Black, Ariel Alternatives has acquired a top provider for people who are deaf and hard-of-hearing in a deal reportedly worth $1.3 billion.
The private equity business of Ariel Investments, Ariel Alternatives, bought 52.5% of the common stock from the shareholders of Sorenson Communications, Willkie Farr & Gallagher reported. The deal announced last month is the initial one for Project Black, a fund that invests in and scales minority-owned firms.
The groundbreaking deal was the biggest news that emerged from the first Minority Business Economic Forum for the National Minority Supplier Development Council (NMSDC).
The virtual and live event, held May 11-12, included roughly 850 attendees covering a broad mix of business and government leaders.
The development, too, was compelling as emerging ventures like Project Black, gaining work from potentially lucrative infrastructure packages and expanding into new technologies like electric vehicle charging stations, could represent new game-changing opportunities for Black businesses.
“As we celebrate our 50th anniversary, we know there is still much more work to be done,” Ying McGuire, CEO and president of NMSDC said. “This leading event will tap the top leaders of corporate America, the Administration, and leading thought leaders in academia to re-calibrate the MBE (minority business enterprise) narrative to be an integral part of the American economy and serve as a catalyst towards achieving $1 trillion in MBE annual revenue generation (4.3% of U.S. GDP) to support MBE growth.”
In a news release, NMSDC claimed its success is unmatched. Among its successes, the group says it has over 15,000 MBEs connected to over 1,500 corporations. It also reported this week that $396 billion in economic output was generated by its certified MBEs.
In another development, several firms, including DuPont, Google, Hightowers Petroleum Co. and Disney made pledges toward NSMDC’s $1 trillion revenue goal.
The commitments are needed. McGuire asked, “Are we moving the needle enough for economic prosperity for all?” For instance, she pointed out why Black businesses only received 1.67% in federal procurement contract opportunities of over $559 billion eligible for small businesses. She asked why the racial gap has increased 70% since the COVID-19 began. “I’m asking you to lead the march toward economic equity.”
The forum is geared to trigger solutions to the critical challenges minority businesses face, including gaining more access to contracts, capital, and other resources. It also hopes to forge pivotal relationships between MBEs pivotal C-suite leadership.
In the “Getting Scalable MBEs in the Game” session, Mellody Hobson, president and co-CEO of Ariel Investments, and Leslie Brun, co-founder, chairman, and CEO of Ariel Alternatives, spoke on the Project Black Initiative. Ariel Investments, the nation’s first Black-owned mutual fund firm, launched Ariel Alternatives and Project Black in February 2021.
BLACK ENTERPRISE reported Ariel entered the private fund business with a $200 million commitment from JPMorgan Chase. Ariel Investments is No. 1 on the BE Asset Managers list.
With Project Black, Brun says Ariel Alternatives is trying to change the perception of what Black and Brown businesses look like. Unlike other private equity firms, he says Ariel Alternatives is fortunate to have investors who believe it can grow these companies far more quickly or better than they could alone.
“We convinced them we could double the revenue size of (Sorenson) over five to seven years.”
Among her comments, Hobson, a board member at JP Morgan Chase, covered how Project Black surfaced. She says she came up with the idea from two sources: a call in late summer of 2020 from Jamie Dimon, Chase’s chairman and CEO, and the murder of George Floyd.
She spent a weekend writing a memo that she socialized with her smartest friends, including Brun. In the spirt of investment banking, she called the memo Project Black. The idea was to scale sustainable minority businesses by bringing two things together: capital and customers. She added the goal was to have those businesses be Tier 1 suppliers to Fortune 500 companies.
Hobson thought about the scale challenges that exist in our community since 95% of Black and Brown businesses have less than $5 million in revenue. She then thought doing it a totally different way. She asked what if we scale those businesses from the top-down, buying ones with between $100 million and $1 billion?
“They might not necessarily be minority businesses when we buy them,” Hobson thought. But by virtue of our ownership and how we run the businesses with majority boards, C-suite executives, rank and file being owners of the business and growing and diversifying in underserved communities, “we can actually change the narrative for Black and Brown businesses of scale,” she added.
In another session, John Rogers, co-CEO and chief investment officer at Ariel, said more Blacks are being appointed to corporate boards and more people are listening. He said Blacks in those leadership roles must keep fighting for minority communities to create wealth and sustain it for the next generation.
For his part, Earvin “Magic” Johnson, chairman and CEO of Magic Johnson Enterprises, discussed how using connections to gain a desired outcome, remaining humble, and constant listening, helped him become and remain successful for years. He talked about JLC, a firm he recently formed with Jim Reynolds, chairman and CEO of Loop Capital Markets, and No. 1 on the BE Investment Banks list.
Johnson says JLC’s first project was New York’s newly completed LaGuardia Airport Terminal B. He says the total value of the design, construction, and subcontracting work is $2.3 billion, 30% of which is targeted for MWBE participation.
He added the firm is part of the JFK Airport Terminal One project slated to close this year. He says it has a targeted MWBE goal of $2.2 billion, including $1.5 billion for MBEs. JLC focuses on the transportation, communications, energy, utilities, and social infrastructure sectors.