Zef Eisenberg: Maximuscle’s £162m GSK deal

Maximuscle founder Zef Eisenberg discusses selling his business to a pharmaceutical giant, growth plans and what he’ll turn his hand to next


Company Details The lowdown: Maximuscle Founded: 1995 Founder: Zef Eisenberg Based in: Hemel Hempstead Deal value: £162m trade sale Buyer: GlaxoSmithKline
Favoured by gym users, elite athletes and even the SAS, sports nutrition brand Maximuscle is a company that has been closely followed by GB over the past decade.

In December 2010, the business agreed to sell to multinational pharmaceutical conglomerate GlaxoSmithKline (GSK) for a tasty £162m. This followed a refinancing in 2007, when Darwin Private Equity bought the business for £75m, only three years after Piper Private Equity had bought a stake for £10m in 2004. We caught up with Maximuscle’s founder Zef Eisenberg to talk through the details of the sale and discuss his plans for the future:

Why did you decide to do the deal now?

As you know, with private equity an exit after three or four years is always likely. The deal in September 2007 was deemed a good one before the market turned. Since then we’ve increased market share, strengthened the brand and launched new products.

Following two private equity deals, how did the trade sale come about?

We had some very big food groups approach us at the time of the deal with Darwin, but they were beaten to it by nimble private equity guys. They often can’t compete in terms of speed with these guys, who can do a deal in four weeks. When GSK approached they said they loved the business and wanted to buy. We said we weren’t interested. They came back, and again we said we weren’t interested as it was too soon after the previous deal to have got the business to the kind of valuation we were targeting. In the end, they ended up offering a price we couldn’t refuse. So they’re paying next year’s price today.

Was there a sense of vindication for you as the industry was once blamed for causing some athletes’ positive test results?

The one thing no one realised and understood is product quality has always been fundamental. We test every batch for potency and purity, while also drug screening every batch to ISO17025, so they can be used by the world’s top athletes with 100% safety. UK Sport now endorses the ‘informed choice’ testing programme that we created. As part of the due diligence, GSK tested all the products and found that it’s not just a premium product on price but on quality and safety also – that was certainly a vindication for Maximuscle and the industry as a whole. They would never have bought us unless every batch we produced checked out.

What’s the most exciting aspect of the deal?

Rather than the money, which of course is great too, for me the most exciting thing was to sell to one of the biggest pharmaceutical companies. For a consumer food business, I couldn’t ask for a better place to look after the brand; GSK will invest, build and nurture the brand over the long term. When a private equity house buys you, their motives are different. They have a game plan of three or four years and limited appetite for investment and long-term ideas.

Is this a full exit for you now or will you remain involved with Maximuscle?

After being the largest single shareholder in the Darwin deal, I’m now exiting as it is a clean trade sale. The management team will be incentivised and I’ve been asked to stay on as a consultant.

How significant is the identity of the buyer for you?

When GSK get involved they want the market leader. What excited us was that GSK has a mature European distribution channel, with languages, reputation and knowledge of the nuances of those markets. Lucozade is an example of a brand the company took to mainstream distribution through sports centres, vending machines and garage forecourts. I see there being a big push into areas where it was a struggle to gain traction before.

Where else do your interests lie?

I have a property portfolio I’ve been building for 20 years. In 2008/09 we were all in cash. We started helping everyone out and relieving them of their ‘problems’, ie buying trophy assets cheaply! The market has come back strongly for good quality assets now. The portfolio is spread across the Channel Islands, where I live.

What does the future hold for you?

Going forward with Maxicorp, we’re actively looking at opportunities in health and leisure. I have no handcuffs now. For the first time in 20 years I’m free to look at other opportunities.

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