Every Thursday we will share the story of a wealthy African American business person or entrepreneur because their stories provide for gems and hints at what it takes to get to that level. Success leaves clues. A lot of these stories are conveniently hidden in an effort to keep the culture small, thus most people never dream big enough to duplicate or even eclipse the success achieved by our elders. They never even knew it existed. I personally know of several black men who read the story of our billionaire spotlight who cite his story as the reason why they went on to do exactly what he showed was possible.
I always say that anything that you have ever wanted to do there is some African American who has already done it. I say this because people tend to think that if something hasn’t been done then it cant be done. Then we paint ourselves in a corner of “cants” and never do anything. These posts are meant to expose you to what has been done because if it has already been accomplished by someone who looks like you there is no reason why you cant do the same. There is already a path laid out, you just have to follow it. This weeks spot light is my personal favorite: Reginald Lewis.
Reginald F. Lewis (December 7, 1942 – January 19, 1993), was an American businessman. He was the richest African-American man in the 1980s. Born in Baltimore, Maryland, he grew up in a middle-class neighborhood. He won a football scholarship to Virginia State College, graduating with a degree in political science in 1965. He graduated from Harvard Law School in 1968 and was a member of Kappa Alpha Psi.
In 1992, Forbes listed Lewis among the 400 richest Americans, with a net worth estimated at $400 million. He also was the first African-American business owner to build a billion dollar company, Beatrice FoodEducations.
Recruited to top New York law firm Paul, Weiss, Rifkind, Wharton & Garrison LLP immediately after law school, Lewis left to start his own firm two years later. After 15 years as a corporate lawyer with his own practice, Lewis moved to the other side of the table by creating TLC Group L.P., a venture capital firm, in 1983.
His first major deal was the purchase of the McCall Pattern Company, a home sewing pattern business for $22.5 million. Lewis had learned from a Fortunemagazine article that the Esmark holding company, which had recently purchased Norton Simon, planned to divest from the McCall Pattern Company, a maker of home sewing patterns founded in 1870. With fewer and fewer people sewing at home, McCall was seemingly on the decline—though it had posted profits of $6 million in 1983 on sales of $51.9 million. At the time, McCall was number two in its industry, holding 29.7 percent of the market, compared to industry leader Simplicity Patterns with 39.4 percent.
He managed to negotiate the price down and then raised $1 million himself from family and friends and borrowed the rest from institutional investors and investment banking firm First Boston Corp.
Within one year, he turned the company around by freeing up capital tied in fixed assets such as building and machinery, finding a new use for machinery during downtime by manufacturing greeting cards, and he then started to recruit managers from rival companies. He further strengthened McCall by containing costs, improving quality, beginning to export to China, and emphasizing new product introductions. This new combination led to the company’s most profitable year in its history. With the addition of McCall real estate worth an estimated $6 million that the company retained ownership of, he later sold McCall at a 90-1 return, resulting in a tremendous profit for investors. Lewis’s share was 81.7 percent of the $90 million.
In 1987, Lewis bought Beatrice International Foods from Beatrice Companies for $985 million, renaming it TLC Beatrice International, a snack food, beverage, and grocery store conglomerate that was the largest African-American owned and managed business in the U.S. The deal was partly financed through Mike Milken of the maverick investment bank Drexel Burnham Lambert. In order to reduce the amount needed to finance the LBO, Lewis came up with a plan to sell off some of the division’s assets simultaneous with the takeover. (Genius)
When TLC Beatrice reported revenue of $1.8 billion in 1987, it became the first black-owned company to have more than $1 billion in annual sales. At its peak in 1996, TLC Beatrice International Holdings Inc. had sales of $2.2 billion and was number 512 on Fortune magazine’s list of 1,000 largest companies.
If you are interested in learning more about this amazing man you can pick up his book “Why Should White Guys Have All the Fun”. It is a great and entertaining read.