Zef EisenbergFounder of Maximuscle and Maxicorp

SummaryZef 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 personal trainer. His company Maximuscle aimed to take sports nutrition away from the murkier world of dubious scientific claims, dubious ingredients and dark gyms and into the mainstream. With retail sales worth £85 million in 2010, he succeeded.

Eisenberg also succeeded in his aim of achieving a well-managed exit. Following a part sale £10 million 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 that went into Eisenberg’s lucrative exit provides some extremely good signposts for anyone who wants to build and then sell a business.

“ Knowing when to seek help is a sign of a good entrepreneur ”

Timeline

1991 Zef Eisenberg publishes his first book about sports nutrition

1995 Maximuscle starts selling sports nutrition products

2004 £10 million private equity deal with Piper Private Equity

2007 £75 million private equity deal with Darwin Private Equity

2010 Maximuscle sold to GlaxoSmithKline for £162 million

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ProfileIn 1993, a young north London bodybuilder and qualified personal trainer, Zef Eisenberg, self-published a book about sports nutrition products using his savings of £3,000. It exposed the false science of many products on the market, and claimed that too many were a waste of money.

The book quickly sold out its first print run, and Zef Eisenberg set out to build on its success and his customers’ desire for further knowledge and quality products. From the proceeds of the book sales he launched his own branded sports nutrition business, Maximuscle, with products based on sound scientific research and clinical studies.

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.

In 2004, Maximuscle sold some shares in a £10 million private equity deal with Piper Private Equity. This was followed by a £75 million private equity deal with Darwin Private Equity in 2007, in which Eisenberg retained a 30% shareholding.

With retail sales worth £85 million in 2010, Maximuscle was sold to GlaxoSmithKline at the end of 2010 for £162 million, the biggest ever investment in the sports nutrition sector. Eisenberg has gone on to set up Maxicorp, a Guernsey-based fund that invests in leisure and wellness businesses, and high end residential and commercial property.

“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% kosher and properly audited”

The importance of doing things properly

From the first days of Maximuscle, founder Zef Eisenberg has focused on premium and quality. Given the sometimes-murky image of sports nutrition, this was vital if he wanted to bring it into the mainstream. Therefore products were formulated on the best ingredients, quantities and scientific research, rather than price.

All the company’s products are independently drug-screened using testing procedures that are ISO17025 compliant and approved by the United Kingdom Accreditation Service. Though this adds a noticeable cost per unit to each product, it has been crucial to the growth of the brand and Maximuscle’s 100% guarantee of safety for elite athletes and sports clubs. It’s a valuable reminder that in certain sectors, this type of accreditation can provide huge marketing value, as Eisenberg himself proved.

In the late 1990s Maximuscle attracted less-than-positive media attention when athletes who had tested positive for drugs tried to point the finger at its products. Eisenberg was able to produce all the necessary independent evidence that Maximuscle was not, in fact, to blame, and he invited the media, trading standards and UK sport to the firm’s headquarters to see for themselves and test whichever products they wanted. Excellent press coverage ensued, which helped bring Maximuscle out of its specialist sports niche and into the mainstream.

The moral of the story? The investment in testing and building scientific credibility combined with Eisenberg’s ability to handle the media and hold his nerve created a huge sales boost from a situation that could have destroyed the company. However, that type 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 time on managerial tasks that he didn’t enjoy, and not enough on the research and science, and so decided it was time to take the business to the next level, by bringing in professional management and the next calibre of staff to attract private equity investment.

With sound evidence of sales growth already in place, Eisenberg’s task was to put in place a strong management team. This had the

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“genuine business people, not just investors”

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“You get a lot of salesmanship, everyone ends up wasting time and you lose trust”

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.

He warns, though, that attracting a successful exit can take years to execute while you put in place a management team and build up several years of audited accounts. You need 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% kosher and properly audited,” he told This is Money.

Controlling the pace of growthThe step-by-step success of Eisenberg’s development of Maximuscle, and then his gradual exit, shows an immense talent

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“The risk is overtrading and being too ambitious. It’s much better to grow carefully and slowly”

at planning, strategy and timing. It also shows that a successful growth strategy demands an ability to balance pushing ahead with holding back. Eisenberg points out that with a non-physical internet business, you can grow far more quickly, as you invest in hosting space, programming and computing power, but with a product company such as Maximuscle, growth has to be managed more carefully. As you grow, it’s essential to maintain service levels, to manage stock and cash flow, to sustain your ability to meet orders, and to ensure your future supply chain and quality controls. This applies equally in tough economic times like the present decade, and in easier ones. “The risk is overtrading and being too ambitious. It’s much better to grow carefully and slowly.”

In other words, the key to successful growth in any decade is not the pursuit of growth itself, but the pursuit of managed growth.www.maximuscle.com