Eisenberg sells Maximuscle to Glaxo
Bodybuilder Zef Eisenberg has sold the Maximuscle brand he founded with £3,000 for £162m, the biggest deal of its kind.
People interested in all sports are now using Maximuscle products, says Zef Eisenberg
Zef Eisenberg is completely open about it. His multi-million pound deal with the billion-pound pharmaceutical company GlaxoSmithKline, selling them his Maximuscle sports-nutrition brand, came "completely out of the blue".
Maximuscle, which the former bodybuilder launched in 1995, is the nation's largest supplier of sports nutritional products. It is on target to achieve £80m worth of sales for the 2010/2011 financial year, up from £69m last year.
In 2007, it was bought by Darwin Private Equity for £75m with Mr Eisenberg remaining the largest single shareholder outside of Darwin. But the 37-year-old is, as he puts it, now "out - that's the end". For £162 million.
He says: "It was always my goal from early on to build the company and have an exit, originally to one of the big food boys. But you could say Glaxo is even better.
"It has evolved into a very strong and powerful consumer health-products company. To sell to them is not only a massive sign of approval for Maximuscle but they are more than capable of taking the brand to the next level."
Yet, while the Guernsey-based entrepreneur may be "out", he is certainly not severing all ties. He will act as a consultant for GSK - its brands include Lucozade, Horlicks and Ribena - in the consumer-goods area, and unsurprisingly, he has had several approaches about opportunities in the health and leisure market. "For the first time in years I am a free agent. Some of these ventures are very interesting and I am exploring them as we speak."
But the father-of-two is also planning to flex his muscles in other areas. First up: a chain of gyms, which he plans to open overseas later this year. "The UK has a fairly mature gym market. There are greater opportunities abroad. We are mainly looking at the Channel Islands and offshore markets."
Estimated global sales value of sports drinks for 2011
Estimated value of Maximuscle’s 2010/2011 sales£3,000
Amount Zef Eisenberg invested to set up Maximuscle
Amount he sold it to GlaxoSmithKline for last month
He acknowledges that the sports and nutrition market has developed considerably since Maximuscle's humble beginnings in Mr Eisenberg's Hendon home.
"When we started 15 years ago, the only gyms that existed were the hard-sweat gyms for body builders and power lifters, and they were the only people using energy drinks and protein providers. Today, people interested in all sports go to the gym and are using these products. The market has massively changed. It has simplified and normalised. People now understand it.
"They realise that these products are performance foods and not these strange hocus-pocus things they were scared of in the past." What's more, he says, the market has become "hugely more regulated. Maximuscle, with its level of sales, has to be whiter than white and squeaky clean. People are realising this and that is the big difference. In the past, people liked the idea of the products but were a bit sceptical."
Global sales of sports drinks are estimated to reach more than $13bn this year and Mr Eisenberg acknowledges that the UK is a significant potentialgrowth market. "There are about 12m sports users in Britain and only about five per cent of those are actually using sports food and nutrition products at the moment. It's a major growth opportunity."
He cites changes in our exercise habits as key. "We live in an increasingly body-conscious world. Footballers, rugby players and pop stars are completely different to 15 years ago. Pop stars can get away with wearing tight tops and footballers have six-packs not pot-bellies, and someone like Madonna is happy to walk around with biceps. 'Size zero' is out of fashion. It's about going to the gym and looking tight. And women are realising that protein is part of that. You can't just live on rice crackers."
Maximuscle is already available in most shops including Asda, Boots and Argos, but the deal is likely to result in a greater penetration of the European and convenience market.
"I think we will soon be seeing Maximuscle products in corner shops, alongside Lucozade and other such drinks."
In 2009, GSK declared a pre-tax profit of around £7.9bn on a turnover of £28bn. The London-based firm approached Darwin last year. "They were focussed on getting involved in this particular sector. They knew that there was soon to be an exit and didn't want to risk losing out to one of the big food boys. And although the investment was the largest ever in the sports nutrition sector, for them it's a fairly small investment to buy the biggest brand there is."
Surely he could now retire? "That's never been my style", says Mr Eisenberg, a nutritionist, herbalist and gym instructor. "I enjoy working and find it a challenge. I love the sector and it's a bizarre form of relaxation for me."
It is this passion that led Mr Eisenberg, disillusioned with the existing sports-nutrition market, to establish Maximuscle while working in a health food shop.
He invested "every single penny I owned" - £3,000 - into the business. "So it's not a bad return I suppose."
He says the key element when seeking an attractive exit is to "make sure you have 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 per cent kosher."
As for starting a business: "Keep your costs low and tight at all times.
"As entrepreneurs, you should get involved in a sector which you enjoy, so when you put the hours in, you won't feel it. Strive for excellence in all areas, from the product to the service to the refunds to the delivery. And when it comes to growing, be honest with your limitations. Don't try to do everything yourself. Don't be too proud to get quality advisers and expertise to help you."