7 Businesses That Went From Black-Owned To Corporate

Phat Fashions – bought by Kellwood in 2004 for $140 million

Phat Fashions was founded in 1992 by Russell Simmons as an urban fashion brand with Phat Farm, a men’s urban apparel line, as its flagship venture and expanded to include the Baby Phat women’s clothing line by Simmons’ then wife, Kimora, in 1999. The company’s annual revenue was approximated to be $200 million at the time of the merger. Russell and Kimora Simmons continued in their leading roles at the company following its acquisition by Kellwood. According to Kellwood CEO Hal Upbin, the company had been interested in expanding into the urban apparel market since the late 1990s, but was not convinced of its long-term viability until shortly before the Phat Fashions acquisition.

Soft Sheen – acquired by L’Oreal in 1998 for an unreported sum, estimated to be around $160 million

A household name in ethnic hair-care, Soft Sheen was acquired by L’Oreal USA – the American division of French cosmetics giant L’Oreal – in July of 1998 for an undisclosed sum. At the time of acquisition, Soft Sheen boasted annual sales figures of close to $95 million.

While the financial details of the deal remained elusive, L’Oreal’s interest in the ethnic hair-care market was readily apparent – in the wake of the acquisition, L’Oreal sought to expand the Soft Sheen product line and increase funding for research and development projects.

Burrell Communications Group – merged with Publicis Groupe in 1999

Specializing in marketing aimed at the African-American demographic, Burrell Communications Group had ample experience in urban and youth marketing to bring to the plate. In the late 1990s, however, the company was facing pressure to expand into the general advertising market in order to stay competitive. It elected to use an alliance with French advertising giant Publicis Groupe as the vehicle to carry it towards that goal, setting up a merger with the company in 1999. As a result of the deal, Publicis Groupe acquired 49% of Burrell Communications’ stock for an undisclosed sum.

Translation Consulting and Brand Imaging – acquired by Interpublic Group in 2007 for a reported sum of between $10 and $15 million

Owned by marketing heavyweight Steve Stoute, Translation Consulting and Brand Imaging was an agency that specialized in helping celebrities partner up with major corporate sponsors and launch joint marketing campaigns aimed at the urban and youth demographics.  Translation’s clients included numerous celebrities, such as Jay-Z, Beyonce, and T.I. and the company was responsible for several highly successful advertising campaigns. In late 2007, Translation Consulting was acquired by Interpublic Group – a massive media and marketing conglomerate with offices in over 100 countries – for an undisclosed sum, thought to be between $10 and $15 million. Following the sale, Translation continued to operate as an independent unit and Stoute went on to start Translation Advertising with Jay-Z in 2008.

BET – acquired by Viacom for $2.34 billion in 2000

Mass media giant BET, a cable channel catering to the African-American audience with a focus on hip-hop and urban culture,was one of the nation’s largest black-owned companies. BET Holdings, the owner of BET, reported $225 million in revenue in 1999, the year before the company’s purchase by Viacom for close to $2.4 billion. Viacom also assumed BET Holdings’ $570 million debt as part of the sale agreement. The deal, which greatly increased BET’s advertising revenues, reflected positively on the value of Viacom’s stock.

Essence Communications Partners – acquired by Time Inc. in 2005 in a transaction reported to be valued $170 million

Essence Magazine, a major publication targeted at African-American women, was for a long time the premier success story amongst black-owned businesses – its 35-year publishing history standing as a stark testament of the perseverance of its creators and the relevance of its material. With a circulation figure of 1.1 million and a well-established reader base, Essence Magazine was an appealing acquisition option for media conglomerate Time Warner as it was increasingly trying to court minority demographics. In 2000, Time Inc., a subsidiary of Time Warner, secured a major stake in Essence magazine by purchasing 49% of Essence Communications, the magazine’s parent company. However, the acquisition was not complete until 2005, when Time Inc. obtained the remaining 51% in a deal reportedly valued at around $170 million.