Growth in a Difficult Decade: Zef Eisenberg, Maximuscle and Maxicorp

“ Knowing when to seek help is a sign of a good entrepreneur ”Zef EisenbergFounder of Maximuscle and MaxicorpSummaryZef Eisenberg started selling sports nutrition publications from 1991 under the name Maximuscle,with branded sports nutrition products arriving in 1995. He also worked as a fully qualified personaltrainer. His company Maximuscle aimed to take sports nutrition away from the murkier world ofdubious scientific claims, dubious ingredients and dark gyms and into the mainstream. With retailsales worth £85 million in 2010, he succeeded.Eisenberg also succeeded in his aim of achieving a well-managed exit. Following a part sale £10million private equity deal in 2004, and another part sale £75 million private equity deal in 2007,Maximuscle was bought by GlaxoSmithKline for £162 million at the end of 2010. The planning thatwent into Eisenberg’s lucrative exit provides some extremely good signposts for anyone who wantsto build and then sell a business.

Maximuscle and Maxicorp 154Timeline Profile 1991 Zef Eisenberg In 1993, a young north London bodybuilder and qualified personal publishes his first book about sports trainer, Zef Eisenberg, self-published a book about sports nutrition nutrition products using his savings of £3,000. It exposed the false science 1995 Maximuscle starts of many products on the market, and claimed that too many were selling sports nutrition products a waste of money. 2004 £10 million private equity deal with The book quickly sold out its first print run, and Zef Eisenberg set Piper Private Equity out to build on its success and his customers’ desire for further 2007 £75 million private knowledge and quality products. From the proceeds of the book equity deal with Darwin Private sales he launched his own branded sports nutrition business, Equity Maximuscle, with products based on sound scientific research and 2010 Maximuscle sold to GlaxoSmithKline for clinical studies. £162 million The products were initially sold via direct mail, then through trade sales and online. The company abandoned a short-lived retail venture because aspects like staffing, stock control and dealing with theft were a drain on management time. As part of its growth strategy of taking sports nutrition into the mainstream, it has managed to persuade major chains like Tesco, H&B, Boots, Asda and Argos to sell its products, as well as gyms, sports shops and other specialist retailers. Eisenberg has also built the brand through endorsements by high- profile sports teams, including the Welsh Rugby Union, the England and Wales Cricket Board, British Judo, London Wasps and Ospreys rugby clubs, and Celtic and Rangers football clubs. Ambassadors for the brand include Naseem Hamed, rugby players Josh Lewsey, Gavin Henson and Lee Byrne and English cricketer Stuart Broad.“Make sure you have In 2004, Maximuscle sold some shares in a £10 million private at least three years of equity deal with Piper Private Equity. This was followed by a £75 increasing sales, an million private equity deal with Darwin Private Equity in 2007, in effective management which Eisenberg retained a 30% shareholding. team, a business that does not rely on you With retail sales worth £85 million in 2010, Maximuscle was sold for everything, and to GlaxoSmithKline at the end of 2010 for £162 million, the biggest accounts that are ever investment in the sports nutrition sector. Eisenberg has gone 100% kosher and on to set up Maxicorp, a Guernsey-based fund that invests in leisure properly audited” and wellness businesses, and high end residential and commercial property.

155 Maximuscle and MaxicorpThe importance of doing things properlyFrom the first days of Maximuscle, founder Zef Eisenberg hasfocused on premium and quality. Given the sometimes-murkyimage of sports nutrition, this was vital if he wanted to bring it intothe mainstream. Therefore products were formulated on the bestingredients, quantities and scientific research, rather than price. “genuine businessAll the company’s products are independently drug-screened using people, not justtesting procedures that are ISO17025 compliant and approved investors”by the United Kingdom Accreditation Service. Though this addsa noticeable cost per unit to each product, it has been crucial tothe growth of the brand and Maximuscle’s 100% guarantee ofsafety for elite athletes and sports clubs. It’s a valuable reminderthat in certain sectors, this type of accreditation can provide hugemarketing value, as Eisenberg himself proved.In the late 1990s Maximuscle attracted less-than-positive mediaattention when athletes who had tested positive for drugs tried topoint the finger at its products. Eisenberg was able to produce allthe necessary independent evidence that Maximuscle was not, infact, to blame, and he invited the media, trading standards andUK sport to the firm’s headquarters to see for themselves andtest whichever products they wanted. Excellent press coverageensued, which helped bring Maximuscle out of its specialist sportsniche and into the mainstream.The moral of the story? The investment in testing and buildingscientific credibility combined with Eisenberg’s ability to handlethe media and hold his nerve created a huge sales boost from asituation that could have destroyed the company. However, thattype of high-wire calmness is only effective if everything is 100%bona fide and the testing is credible.Around 2002, Eisenberg felt he was spending too much timeon managerial tasks that he didn’t enjoy, and not enough on theresearch and science, and so decided it was time to take thebusiness to the next level, by bringing in professional managementand the next calibre of staff to attract private equity investment.With sound evidence of sales growth already in place, Eisenberg’stask was to put in place a strong management team. This had the

Maximuscle and Maxicorp 156 additional benefit of freeing him from the day-to-day tasks that were using up too much of his time and energy: “Knowing when to seek help is a sign of a good entrepreneur”. So, the following year, he recruited a new non-executive chairman and managing director, and together they began the search for a private equity backer that would finance a buy-in management buy-out (or BIMBO). The process of finding a private equity deal took several months and was slightly bumpy at times. But it taught Eisenberg valuable lessons about finding the right investor. When looking for a private equity deal, he warns, do not just opt for the highest bidder. He says Piper Private Equity, with whom he did a £10 million deal in 2004, stood out because they were “genuine business people, not just investors”. He recommends that business owners look for a partner who can bring something to the table: in Piper’s case, it was their own experience of building businesses and brands and achieving organic growth. This expertise helped Maximuscle increase its sales threefold over the next three years. For any business looking for a committed venture capital partner, Eisenberg emphasises the importance of having sound accounts and figures in place. From his new position on the other side of the pitch, at Maxicorp, he has complained that too many approaches from entrepreneurs contain unrealistic projections and accounts that don’t stand up to scrutiny. Once you dig into the pitch and ask questions, the projections often fail to stand up to scrutiny. “You get a lot of salesmanship, everyone ends up wasting time and you lose trust,” he says.“You get a lot of salesmanship, He warns, though, that attracting a successful exit can take years everyone ends up to execute while you put in place a management team and build up wasting time and you several years of audited accounts. You need to “make sure you have lose trust” at least three years of increasing sales, an effective management team, a business that does not rely on you for everything, and accounts that are 100% kosher and properly audited,” he told This is Money. Controlling the pace of growth The step-by-step success of Eisenberg’s development of Maximuscle, and then his gradual exit, shows an immense talent

157 Maximuscle and Maxicorpat planning, strategy and timing. It also shows that a successfulgrowth strategy demands an ability to balance pushing ahead withholding back. Eisenberg points out that with a non-physical internetbusiness, you can grow far more quickly, as you invest in hostingspace, programming and computing power, but with a productcompany such as Maximuscle, growth has to be managed morecarefully. As you grow, it’s essential to maintain service levels, to “The risk is overtradingmanage stock and cash flow, to sustain your ability to meet orders, and being tooand to ensure your future supply chain and quality controls. This ambitious. It’s muchapplies equally in tough economic times like the present decade, better to growand in easier ones. “The risk is overtrading and being too ambitious. carefully and slowly”It’s much better to grow carefully and slowly.”In other words, the key to successful growth in any decade is notthe pursuit of growth itself, but the pursuit of managed growth.www.maximuscle.com

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Growth in a Difficult Decade: Zef Eisenberg, Maximuscle and Maxicorp

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