How Jennifer Aniston And Reese Witherspoon Helped Viviscal Exit For 15x EBITDA

June 15, 2018 |  

About this episode


With celebrity endorsements like Jennifer Aniston and Reese Witherspoon, Viviscal hit €50 million in revenue…so, why would the CEO want to sell it?

To read a transcript of this episode, click here.

James Murphy, Founder and CEO of Ireland-based Lifes2Good, bought and developed Viviscal, which is a product that promotes hair regrowth for women.

Viviscal got endorsements from A-list celebrities like Jennifer Aniston and Reese Witherspoon on its way to €50 million in revenue.

Murphy received 10 offers for the company and narrowed it down to two finalists. In the end, Viviscal sold to Church & Dwight (C&D), the owner of Arm & Hammer toothpaste and Trojan condoms, for €150 million representing approximately 15 times Viviscal’s EBITDA.

In this episode, you’ll learn:

  • The important shift from distributing a product to creating a brand
  • How Murphy got 30% of his revenue from recurring subscriptions
  • How Murphy safeguarded his secret hair regrowth formula during due diligence

Viviscal grew to become the #1 hair restoration product for women because of how Murphy differentiated it from the snake oil competitors were selling. He did this by using rigorous clinical trials and celebrity endorsements. You’ll create your own differentiated market position using the Position Planner tool in The Value Builder System™  — get started for free right now by completing Module 1.

About Our Guest

James Murphy is the Founder and CEO of Lifes2good, having started the company in 1997. Under James leadership, Lifes2good has grown from a small distribution company to a global enterprise. He championed a marketing model comprising of direct sales to consumers through database and internet marketing in addition to selling into pharmacy chains and health stores.
In 2007 Murphy acquired the Viviscal brand when the business had a turnover of €700k. The Viviscal business grew to €50m in 2016, and in January 2017, Lifes2good successfully sold the Viviscal brand to the U.S. conglomerate Church & Dwight for €150m.


John Warrillow:                Hey this episode of Built To Sell Radio is brought to you buy the Value Builders System. I had the opportunity to interview Stephanie Breedlove the other day. She sold her $9 million payroll company for a cool $54 million. How did she do it? She focused on the eight things that drive company value.

John Warrillow:                Things like what we call the Switzerland Structure, monopoly control, recurring revenue … all things you’re going to evaluate in your own business using the Value Builders Score. Takes about 15 minute to complete the survey. Go to

John Warrillow:                So my next guest, James Murphy, actually came up with the cure for baldness. No, I’m serious. He actually came up with a cure and particularly for female hair regrowth called Viviscal, a brand that he built to 50 million euros before he sold it for a cool 150 million euros, or about 15 times EBITDA.

John Warrillow:                Lots of good stuff in James’s interview. Listen for how he protected the formula he created, how he actually acquired it, and then chose to protect that formula over time. Listen to his thinking around the difference between distribution company and how the lower valuations they enjoy compared with a brand and why it was so important for him to create the Viviscal brand. Also, listen to his continuity program. The time of the acquisition, 30% of his revenue was coming from recurring sources. Lots of really interesting data points from this interview with James Murphy.

John Warrillow:                James Murphy! Welcome to Built To Sell Radio!

James Murphy:                 Hi, John! Glad to be on the show.

John Warrillow:                Yeah, for sure! So tell me a little bit about this company, Lifes2Good. What do you guys do?

James Murphy:                 Well, it originally started off as a distribution company in Ireland and it was made mostly based on my previous experience going out, taking brands and building them and whatever. But, ideally, the idea was to try and take really proven products from around the world and introduce them, mostly health and beauty products, into the Irish market through direct response, direct to consumer, pharmacies, online and whatever and then it kind of grew and we were in lots of things from pain products to beauty product, creams, cosmetics, all sorts of stuff.

James Murphy:                 And then in 2002, it became clear that in order to get the brands, or further get decent brands, I have to be able to offer the UK and Ireland so both businesses in the UK which brought me into the whole supplement industry, healthcare supplements, and bought our business in 2002 and that brought me into skincare supplements, food supplements, for skincare and haircare and from there, it just … we tended to focus mostly on that end of the business.

John Warrillow:                And, and at some point, you got involved in the hair restoration, sort of, I’m not sure the exact category. You came up with the cure for baldness, as I understand it. Is that true?

James Murphy:                 That is not too far away from the truth, but actually what happened was when I bought that distribution business in the UK, they had … I was trying to bring in a pain product that I’d found out of Connecticut that I wanted to launch into the UK so they had a nice database, they had some very good distribution into retail and pharmacy and drugstore and whatever. But what was interesting was that they had a database of 5000 people who were buying a supplement, a hair growth/hair loss supplement which was targeted at men in a black box and I really didn’t think that it probably worked or was up to much or whatever else.

James Murphy:                 However, what intrigued me was that half the database was female which I thought was interesting because I thought they were buying it for their counterparts or their partners or husbands or whatever. So, when I did a bit more research, I realized that they were actually buying that product for themselves. So, when I looked into it even further and I did I bit more research, I realized, oh my god, actually women do suffer from hair loss! And when I looked into it and researched it further, I found that hair loss in women and men is completely different and men is what they call permanent hair loss or male pattern baldness. On the female side, it was more temporary. Got to do with hormonal issues. Got to deal with product that they use or put on their hair, but also, and more importantly, stress.

James Murphy:                 And I realized that a lot of these things were kind of manmade or woman made or whatever you want to call it and so I realized, oh, this needs to be changed so I decided to change everything, move away from men, and target the whole business towards the female side and with everything else at that time, I knew that celebrities to endorse the product and to help me on the PR side and so we had a very good celebrity in the UK who used the product for four months, got the results, and then it just all took off from there.

John Warrillow:                Who, who has endorsed the product? Would I know of any the women that have endorsed it?

James Murphy:                 You certainly wouldn’t know the ones in the UK, but the ones in the US you definitely know. So, Jennifer Aniston, Gwyneth Paltrow, and then a host of other models and, you know, talk shows hosts have used it over the years. I mean, in the end, we had probably … I think at the end of the thing, we probably ended up with maybe 12 or 13 out of the top hair stylists actually recommending the product and the beauty was that they were also using the product with all of their celebrity hair, their celebrities who used the product and who they recommended it to and it just kind of exploded from there.

John Warrillow:                So the products name is Viviscal, is that right?

James Murphy:                 That’s correct.

John Warrillow:                Okay, so, does it … I have to ask. Does it actually work?

James Murphy:                 Well, when we bought that business in the UK, we became the distributor for that product in the UK and they had two clinical trials that were done on men mostly in Scandinavia and, I mean, I won’t go into all the details, but a big opportunity came up for us in 2007 for us to actually buy the original product which was the Viviscal brand. So, we literally went up to Finland in 2007, 2006, and the business was quite small. It was probably just short of a million dollars and … but it had [inaudible 00:07:05] distribution in a couple of countries worldwide including half a million turn over in the US, mostly focused on direct to consumers, some pharmacies, and also into hair transplant clinics and that kind of stuff.

James Murphy:                 But, so it was very, very small when we bought the business. But what was really interesting was, for the first time in our business, we were moving away from being just a distributor of somebody else’s brand to actually owning our own brand and that was a major, the move for the company in terms of it’s history.

John Warrillow:                But I guess what I’m curious to know is, like, how did you get comfortable with the efficacy of the product? Like, it’s a million dollar company. It’s small. I mean, everybody, you know, it’s almost a cliché. It is, in fact, it is a cliché to say I’m going to come up with a cure for baldness. It’s a cliché. So, how did you see this finished company and actually get comfortable with the fact the the product actually delivered the results that it claimed it could?

John Warrillow:                Like, was it clinical trials? Did you, did you try it yourself? Like, what was the way you … how did you know it worked and it was worth paying for?

James Murphy:                 All of that. Absolutely all of that. So, go back to 2002. What we bought at that time was the distribution of Viviscal and up to then, it had been terms of men … it probably didn’t work as well for men and so therefore, it wasn’t really going anywhere. It was quite a nice business. It was probably short of somewhere, again, short of a million dollars in terms of turnover in the UK at the time.

James Murphy:                 However, when I switched it over and started to focus in on the female side, first thing I did is I come from a family of nine; four sisters. Had all four sisters test the product. All four sisters come back and said wow, this is amazing. Not only have I noticed my hair getting thicker, but their nails and that was probably the deciding factor for me because the keratin that’s in your nails and in your hair is exactly the same. So if their nails started to grow pretty swiftly, then it had to be having the same effect in their hair.

James Murphy:                 The other thing I noticed was, obviously, you know, I had to understand all about the hair loss and the hair follicle and the actual process of how hair grows and whatever and my getting into that, it became kind of clear why it was working. So we moved on from there and when we started in the US in 2006, 2007, we knew that in the US it was going to be absolutely crucial that we were going have to do some clinical research.

James Murphy:                 so, between 2007 and when we eventually sold the business in 2017, we ended up with 12 clinical trials and so … these clinical trials were all pharma-grade trials. You know, placebo controlled, randomized, sizable clinical trials that were done in brazil. They were done in Europe. They were done in the US and in … on top of that, we did a hell of a lot of consumer research because I supposed when we sold the business, we had a database of almost 300000 people. So in that database, we were always doing loads and loads of consumer research to confirm that the product was working and we did lots of other, kind of, marketing things like we created a thing called a voice where we created a form of, kind of like, a Facebook form and where we allowed a group of women to come together and talk about hair loss and, and obviously we, you know, we had one or two people in the company with access to it, but not anybody else. And everybody was allowed to share their stories so we knew that people were getting excellent results.

James Murphy:                 In addition to that, we expanded the business into the professional side so we went after dermatologists, hair transplant clinics, plastics, right across the board and we found that these guys only recommended stuff like Minoxidil or Rogaine [inaudible 00:11:08] on the basis that that was the only thing that they had clinical research or clinical evidence to prove efficacy. But when we started to go into it, we started producing white papers. We brought some serious experts on board and when we produced the papers, we then went to hair congresses, hair growth congresses, hair loss congresses and we presented our findings throughout the period that we were doing this and then they began to believe, they began to review the papers and slowly but surely they began to realize that, you know, even though this was not a pharma product, it was a natural food, it was always intended to be a functional food with enough clinical science to prove its efficacy.

John Warrillow:                How were you able, or were you able, to protect … I mean, you’d come up with, in North America we have this thing called a caramel chocolate bars. I don’t know if they have the same thing in Ireland, but, you know, it’s the caramel secret. You’d come up with this killer formula. You purchased the business. How did you protect it? Like, was it possible that other people could, basically, create a competing product or were you able to protect the formula in some way?

James Murphy:                 You mean the secret sauce in the coke that makes the Coca-Cola?

John Warrillow:                Yeah, exactly!

James Murphy:                 Well, yes, absolutely. So, there was no patent or anything like that. Which, you know, to be honest with you, I’ve never been a great believer in the whole patent thing because you’d spend more money trying to defend the damn things. So for me, what was really interesting about Viviscal was exactly that, the secret sauce.

James Murphy:                 And so, when we looked into it, we were always intrigued. As a distributor, we never knew because we’d just supply and we’d try to figure out what it was. But when we eventually bought the business, our thing that was got access to, the secret sauce, and what was really interesting was the way in which the marine protein was extracted and there were other ingredients put in and taken out and whatever else and we knew that not only with that could we move forwards in terms of having a secret sauce, but we did what one other thing which was really interesting. We went to a [inaudible 00:13:20] Institute in Ireland and we asked them to take and analyze the ingredient right down to the amino, the amino acids, right down to peptide level and we created what they call a marker and that marker identified exactly what peptide or what amino acids were in there.

James Murphy:                 So, if ever somebody came up and trying to say, look, you know, we have a marine protein extract just like Viviscal, we could take their product and we could break it down and prove that it wasn’t the same and so therefore, they could make no reference and in fact, we did the very boldest thing. One of the big three drug store groups in the US did exactly that. They copied the product and they put up a product on shelf which was their own product. I won’t mention their name. But they did put the product on the shelf and then they said compared to Viviscal.

James Murphy:                 So we took the products and what we ended up doing was we reported them to an organization called the National Advertising Division. Now, as you can imagine, they were a bit peeved when they realized that we did that, but we said look, guys, we told you you can’t do this because whatever you think you have in that product is not the same. We have a secret sauce.

James Murphy:                 And so we went back to our Institute in Ireland and we said guys, take this product and prove to us, which we know, that this is not the same. Which they did. We gave the results back to the NAD and the NAD told them to take of any references to Viviscal because it was a completely different product.

John Warrillow:                And did they take the product off the shelf completely or just, just remove the reference or the comparison to Viviscal?

James Murphy:                 Every product that had, that was launched with the reference to Viviscal, had to be taken off shelf. They then decided to come back out with some of the product with no reference to the Viviscal.

John Warrillow:                Do you have a sense of, at it’s peak … I understand you built Viviscal up to a 50 million turn over brand. Do you have a sense of, at it’s peak, what proportion of the hair growth, female hair growth market you captured?

James Murphy:                 That was always a very difficult thing to estimate, John, because, you know, when we came to the US first, there was no hair loss category. There was, kind of like, hair care. So hair care was shampoos and lotions and conditioners and all sorts of stuff. When we finished, you know, there were … right now you see there’re hair loss categories and in most of the drug stores you find that same … Ulta stores and whatever else. But at the time, it was very difficult.

James Murphy:                 But when we were preparing the product for sale, what we did is we made our best estimate. I mean, so I you were to take just the hair loss supplement industry, we were definitely somewhere north of about 65, 70%. If you took the hair loss category in total, including people who claimed to have either supplement or shampoo or whatever else, we probably were somewhere around the 25%. But, you know, and then if you ring the whole hair care, the fact … the most important thing was that in drug, we were the number one selling hair loss brand.

John Warrillow:                Fantastic. So, take me back to 2013. I understand the business was turning over, Viviscal, the brand was turning over about nine million euros at the time. You were in California. You made a critical decision at that point that would really change the course of the business, I understand?

James Murphy:                 So, in Ireland, you know, with what we call Irish Indigenous Businesses, these are kind of home-grown businesses, so, when we bought the business in Finland, one of the first things we did was we brought the contract manufacturing back to Ireland so we would have more control over not just the manufacturing, but also the product development, understanding the product ingredients, et cetera, et cetera, and indeed, the efficacy in terms of trials and whatever. So we, we added in a few experts which helped us along the way.

James Murphy:                 But, when I … we also have this amazing organization which is a state financed organization called Enterprise Ireland and they picked out, I was lucky enough to be picked out as one of 30 entrepreneurs and we were sent over to … they created this course called Leadership For Growth and they brought the 30 of us over in all sorts of different businesses and whatever acts and different stages over to Stanford University and they created this course and so we spent three weeks out of the year on campus. But the objective of the exercise was to review every aspect of the business including management, objectives, your manufacturing, et cetera, et cetera, right out to the last T. But the objective at the end of the year, was to come up with a five-year business plan.

James Murphy:                 And so while I was there … and we also worked in groups of five or six or whatever. While I was there, I realized, you know, my dilemma was, at the time, was I still called a distribution company or was it a brand owner? And so I set down with lots of different professors over there and we argued it out and whatever else. In the end of it all, I said look, who cares? Let’s just set a business, set a plan, set ourselves a course for the objective to actually deliver 50 million turn over.

James Murphy:                 And so when I did that, and I was clear in my mind, the first thing I did was do the plan, present it to my management team, and we had, at that time, we had an office in the US, the UK. We have an office in France and we were just starting off in South America and also in Australia. So, I brought everybody together and I said right, guys. This is what I want. I want to build this business to 50 million. But more importantly, I want to to build Viviscal to be the number one product in any market that it’s in for hair loss and the idea was to build up all the clinical trials, build up all the efficacy, to put together the experts, to build up the channel so instead of just B2C, direct to consumer. Also pharmacies, any specific hair care stores, and in addition to that, professionals out in to dermatologists, hair transplant clinics, also top end hair stops.

James Murphy:                 So … and the other things was, you know, I came across one kind of reluctance from some of the professional guys. They were saying well, if you were starting this brand in retail, you know, in drug stores and wherever else, we don’t want to be promoting that and then it’s going to be cheaper at drug store while we’re selling it in our clinics and wherever else. I said no problem. Look, you’ll know what I’ll do is I will have one product which is directed towards consumer and drug and then I give you another product called Viviscal Professional. Slightly more expensive because it has better ingredients and what we also did specific efficacies, specific trials for that product so that nobody could argue that the professional product was less efficacious then the one that was in retail. So, whatever ending we needed to do, we absolutely did it with the view to our gaining data objective, or achieving that objective of the 50 million and everybody was absolutely driven and incentivized to get that out.

John Warrillow:                James, why was 50 million euros important to you personally?

James Murphy:                 Because I knew I could I do. I knew that, you know, if I could the business to nine million, I also know that when I had the distribution of this product in the UK, it had a small turn over of maybe six or seven hundred thousand dollars. We built that brand, which wasn’t our brand, we built that brand through the whole female channel into a 20 million pound retail turn over. So we figured, well, if we could do that in the UK, we could easily get this business to 50 million. And so in 2016, when I knew that we were on course to delivery 50 million for the calendar year, 2016, I said the promotion in process to go and find and acquire an e-company.

John Warrillow:                What, what triggered your desire to want to sell Viviscal? What was … why sell?

James Murphy:                 Well, I … first and foremost, you know, the business … I set up the business from scratch but I brought in some key people who I promise that I would give them shares, which I did, and as they achieved certain targets, their shareholding grew but one or two of those people had been involved in other organization where, in a similar situation, CEO, major shareholder, founder, blah, blah, blah, you know, made the same sort of promises and I just let them know, look, I made a promise and I’m going to do it. Did I need to sell? Well, it would be nice to go through the whole process. Having done it, I’m delighted that I’m on the other end because, you know, some people you just get married to brands or businesses which I don’t agree with. I think the, the, the whole objective in business is to build something and then come out the other end by setting it on and because the whole sending process, and coming out the other end, is such an experience that if you build businesses and you don’t do it, you kind of missed, probably, 50% of the whole experience which is amazing.

John Warrillow:                Love it. So let’s talk about that experience now. So, you … so you built Viviscal from nine million to 50 million in revenue. You decided to sell. Take me through the process, like, what’s the next step? Do you, do you hire an investment banker to take it to market? Do you do it yourself? What, what did you do next?

James Murphy:                 So, remember, we’re in the west of Ireland where we protect the continent of Europe from rain so that means we get a lot it. So, we have plenty of time to be inside and think about things. So, in 2016, as I said, we … to … I kind of, we were kind of himing and hawing about selling the business [inaudible 00:23:37] or selling something else. So I set down with some merchant bankers in London and, you know, after that first meeting and everything else, I said no, you know what? If I sell this business, I’m going to be selling it at the age of 55 and 56, and so, you know, I’m going to have plenty of energy. I need to just keep going. So why don’t I just start another brand?

James Murphy:                 And I also thought, you know what? That’s going to be so much cleaner because, you know, if somebody’s coming in, they may not want to buy some of the other brands because they’re not in hair, cutting hair loss like … we have some other products in cardiovascular and skin and whatever else and we just thought no, maybe they’re not interested in that. So I thought that was the perfect solution. That was the first thing.

James Murphy:                 The second thing was that, when I was with that merchant banker in London, you know, they were helping us out. They were going to charge us four, 5% and all this tax stuff and it became clear over a couple of months that these guys were very UK focused. And so, I had to stop and think and say, well, maybe we got to rethink this because this is a UK merchant bank in a country in which I only sell maybe 20, 22% of my turn over. 75% of our turn over at that stage was coming from the US. So, as luck would have it, we got a letter from another merchant bank type organization out of Paris who had an office in New York and in Paris.

James Murphy:                 So, I thought, okay, I’ve had call with them on the phone. Jumped on a plane. Went over and sat down and saw wow, these guys have a serious operation. They really know, not only do they know what they’re doing, but they have contact with the kind of companies in the US that I would imagine would be very interested in this brand. As opposed to the guys in the UK who probably would find me a buyer in the UK but would not give me the same value.

James Murphy:                 I also knew that the multiples that people were buying or paying for brands like this in the US were, you know, as long as your [inaudible 00:25:37] was recent, they would play in multiples of turn over which was also very interesting. So-

John Warrillow:                What did you think the … James, what did you think the company was worth in terms of a multiple of your turn over before you entered into the process? What did you think you could get for the business in the United States?

James Murphy:                 Well, the guys in the merchant bank in London who told me that we, you know, we should be able to get somewhere close to 100 million. So, I thought, well, you know, if I got 110 maybe, I don’t know, North London 110, I would be very happy. But personally, I thought, you know what? Maybe it’s worth more. Who knows? We would never know until we go through the process and the process started with us working with the guys in Paris and New York to actually come up with an information memorandum.

James Murphy:                 And that information memorandum was kind of like a teaser and that … so what they did was we put together a really professional document and they took that document and they sent it out to lots of companies, CPG companies in the US … so we decided-

John Warrillow:                Consumer Packaged Goods companies, yeah.

James Murphy:                 Exactly. So we decided to focus on US, UK, some companies in Europe and also we decided to throw a couple of Chinese companies into the hat.

John Warrillow:                Interesting.

James Murphy:                 So we … there was … so they … once we put it together, they took all of the top line information and sent it out and then, slowly but surely, companies started to come back. So, in the beginning of 2016, we started to get some really interesting companies coming back from all over the place and what happened was they pulled them all together and said okay, guys, before we go to the next level, you’re going to have to put a bid on the table. So, some of the big guys that were in there, so … the bid started off, initially, around 103 and it started going up from there.

James Murphy:                 So, you know, began … went from 103 up to what was it? 115 or something like that or .. and you know, when it … when somebody came in, I remember it was all subject to due diligence. So, you know, while we were getting excited that we were north of 110, we knew that okay, that’s all based on these guys sitting down and grilling everything and opening the data room and whatever it was, but it was such an exciting phase because we knew then that the business, more than likely … and we knew we were able to deliver on the due diligence. We knew that we should be able to get the business to value north of 115, 120.

John Warrillow:                Got it. So, let me come back that in a second. Just before we go there, on your 50 million in revenue, what was your EBITDA margin on that?

James Murphy:                 So the EBITDA at that time was about 20%.

John Warrillow:                20%? So you’re probably … you’re netting around 10 million on the 50.

James Murphy:                 Yeah.

John Warrillow:                Got it. Okay, so you’re thinking it’s probably worth 10 times EBITDA or about two times revenue, is what you’re thinking in your mind but you’re not sure if there’s more on that … you’re leaving money on the table if you were to sell for that?

James Murphy:                 Yes.

John Warrillow:                Got it. Okay. As you … the next question I’ve got, as it relates to … your in these discussions. You know due diligence is coming. How do you avoid sharing too much in the diligence phase such that one of the bidder could basically go and, and compete with you based on the information they gleaned from the diligence process?

James Murphy:                 Well, first of all, the information memorandum is very top line information. So, you’re not really giving away too much. Okay, you’re giving away, you know, the some … let’s say one of the bigger competitors could take the information and they could kind of work out your market share. But remember, we’re still … it was still a very much a … it was an unknown category so it was a growing category. Nobody had a lot of information. There wasn’t a lot of IRI as an [inaudible 00:29:47] data anywhere. So, you know, we know that okay, there might be able to figure out or make some sort of an estimate, but it wasn’t 100% and-

John Warrillow:                Were they asking you for details on the formula, on the marine protein that you developed? I mean, were they, were they getting nitty gritty into the science behind-

James Murphy:                 No.

John Warrillow:                … the actual tech-

James Murphy:                 No, no, no, no. So, just … so remember at that stage, we were at the information memorandum. So just top line information. They had to take it on face value. They had to believe that those numbers and everything else was correct, right? So that was the first thing and then they put in this bid. Then you go to phase two and phase two is where you accept them in and when I say accept them in, you know, if we saw a company that we felt, well, we didn’t really want them to be in the process, we could say no.

James Murphy:                 Now what we didn’t, as it turned out but the next phase where we had to go and sit down. So, we ended up with two separate weeks out of New York where we had presentations based on a new presentation which was far more information which we gave to them. From which, they would then start to really dig into the process.

James Murphy:                 So in June of 2016, we set down in a boardroom in … just across, in fact, very close to the Apply building or the Apple store in, beside Central Park in New York-

John Warrillow:                In Manhattan. Yeah.

James Murphy:                 In Manhattan and we literally had, over the course of the two weeks, we had about 10 or 12 companies with about 20, 25 people in the room absolutely grilled. I mean it was the most exhilarating experience. Probably the best thing that ever, I ever did. Was the most amazing thing when you have 20 people just literally coming at you with questions from everywhere and anywhere.

James Murphy:                 And so it was our, CUSCO, myself as the group CO, our CFO for the group and then a marketing CMO of marketing. So four of us were there and we literally took every and any questions we could take over the course … so they literally grilled us for about five or six hours and that then was the start of the whole process where they were entitled to come in to the data room. Now, obviously haven’t signed all the NDA’s and all that stuff, but from there on in it was open book, open the kimono as they say.

John Warrillow:                And again, at this stage, now that you’ve got the NDA’s in place and you’re in the management, phase two, the management team, is anybody asking direct, specific questions about the formula itself? What’s the protein? You know, how defendable is that … is the formula itself? Are they getting into that area of questioning?

James Murphy:                 Even though you open the commode, John, you’re still wearing any underpants so the no way you’re ever really going to give them too much. No. No!

John Warrillow:                Jesus, not … this is a family show, James! Keep it clean!

James Murphy:                 Absolutely! This and that … everybody knows what an underpants is. It’s safe. We’re on safe ground here. So, listen, no, of course nobody was ever going to get the formula. Literally, they could take the box and they could ask us about what was in the box. Whatever’s in this marine protein, it’s protected. When you buy the business, you get access to the formula.

John Warrillow:                Love it. Okay. So you’ve got 10 companies, they’re grilling you in these, in these marathon sessions in Manhattan. Of the 10 or 12 companies, how many firm offers did you get? How many letters of intent or LOI’s did you get?

James Murphy:                 Well, we had letters of intent offers, initiated offers from all 10, or all 12.

John Warrillow:                And then what about the management team, did anyone, did anyone drop out of the process at that point?

James Murphy:                 Well, we kind of pushed away a few of them. There were a couple of VC companies that wanted to come in and, you know, anybody that really wanted to come in and wanted us to stay on in an airing out and all that kind of stuff, we just weren’t interested in that. You know, I agree with my senior management team that, you know, we might be around for … or the guys might be around for 12 months or maybe maximum two years tops for the guys in the US. But, people just didn’t want to get drawn into that and I knew I had pushed them for as long as I could to get the business up to the 50 million so I might have been able to push it a bit more if I’d wanted. Plus, I might have had to give more away or whatever.

James Murphy:                 So, we were more interested in companies that were CPG, Consumer Goods Companies that literally had a big operation who were used to bolting on brands like this. So they were more interesting and as it turned out, they were the ones that kind of competed at the end.

John Warrillow:                Got it. And tell me about that competition. What was the range in offers between the lowest and the highest?

James Murphy:                 The range in offer was about 25%.

John Warrillow:                Got it. And were, was your investment banker kind of playing one off trying to get to the maximum price? Like, how did, how much back and forth was there to actually come up with a winning bid?

James Murphy:                 Well, what happened was, it ended up with two, you know, one of them a very big company that was involved and they … I mean, they were kind of neck and neck for a bit but then we kind of pushed a bit harder and … I mean, C&D had got, I think … look, let’s say … the merchant banker got it to what they thought was really good. Meaning, you know, and I thought well they would say that, wouldn’t they? Because they were going to get their percentage.

James Murphy:                 So, you know, it got to a point where I took over the negotiations myself and so we went over to Paris. They came over with what the maximum amount they could offer and I said look, I need more. You need to go back to board and get some more. So, that’s what I did and I kept pushing because I knew from the whole process that we had gone through and the reaction of all these people, that they were seriously impressed and a lot of them, you know, we had coffee or lunch or whatever afterwards, you know, they were seriously impressed with the amount of effort and detail that we had put in, an investment that we had put into the brand and that was things like, you know, 12 clinical trials as opposed to maybe two or three for most products in similar categories.

James Murphy:                 The global impact, the fact that we had our own operation set up in Canada, US, Brazil, Ireland, UK, Australia, all English speaking. The marketing strategy was very similar in all the countries so it could easily move from one to the other. We had an infomercial, the only infomercial that was successful selling a supplement where you were literally promising hair loss in three months. I mean, you know, no infomercial promises anything that doesn’t produce results in, like, five minutes and we were promising three months. That’s how good it was.

James Murphy:                 But we had also set up what we called the Jury, the Viviscal Jury, where basically anybody that came in, you know, we pushed as hard as possible to get them into the three months because we knew that they wouldn’t see the results in anything less than three months so we offered them really serious incentives to bring them in and once we had them in, you know, we didn’t just keep flopping them product. What we did was we kept reinforcing their belief in the product by showing them more information; a new trial, a new [inaudible 00:37:36], a new endorsement, new research, new consumer research, anything that was a good information and would be useful for somebody that’s trying to grow out their hair or to reverse hair loss.

James Murphy:                 So they began, they trusted us as a brand and as a company to such an extent that it was so much easier to get them to repeat purchase. We also had the continuity program in place whereby, you know, we signed them up and we end up with let’s say nearly 30% of people staying on the product for over a year which was serious in terms of how easy it was for us to get them, to convince them to continue to take the product. So-

John Warrillow:                So the continuity program as a subscription offering of some sort where they would, would auto ship-

James Murphy:                 Exactly. So when we signed them up from the infomercial, we signed them up for three months and then they would also ask and get another three months unless they canceled. And, you know, rather than just not telling them, we knew that if we reminded them, that there was, you know, they were going to be signed up for another three months … again, because the whole honesty. You have too many companies are out there afraid … they just want to hit them with the credit card and whatever else.

James Murphy:                 You know, the more honest you are with your consumer, which your consumer the more they are willing to share, the more willing to continue with the program, they wanted to work as much as you want to sell.

John Warrillow:                Got it.

James Murphy:                 The more honest you are, the more you will sell and so we put plans and programs in place that worked very closely with our customers in terms of communication and if, also, we had call centers in the US, in Europe or whatever else and if we had a consumer, and believe me, there are in every product you have products for consumers where the product just doesn’t work or they sell their excuse. We empowered them to refund. There was no push in that.

John Warrillow:                So, so to go back to the deal itself, you had two offers. It had come down to two competing parties. What was the offer on the table at the time that you said wasn’t good enough?

James Murphy:                 Let’s say it was about 15% below what we finally got.

John Warrillow:                Got it. So my understanding is, you got 150 million euros for the business in the end?

James Murphy:                 Yeah.

John Warrillow:                So, you know, I’m just doing the quick math-

James Murphy:                 Well, let me help … let me help you, John. I’ll say in fact, what happened was, we lost one of the, or the second bidders. We lost them at about 130 and then we pushed on until we got what we felt was the true value of the business.

John Warrillow:                James, I got to ask, 130 million euros is a lot of money! What … you know, why push? Why not just say thank you very much, that sounds great, let’s move forward? Why, why put it all at risk for an extra 15%?

James Murphy:                 Because that extra 20 million is what I have put into what I call the Life2Good Foundation for vulnerable women and children and so, I knew the more I get from companies that have it, the more I’m in control to do what I want to do with it. So, I don’t need to invest it in another business. I can give it away to people who need it.

John Warrillow:                So you’d already started to think about what you wanted to do with the money even before you sold?

James Murphy:                 Absolutely.

John Warrillow:                Interesting. Okay. So, you get them … how did, I mean, I got to ask, there’s a pretty good offer on the table. Did they get a sense, then, when you were down to one that they were the only bidder left in the dance or were you able to kind of continue the sort of idea that there were multiple bidders?

James Murphy:                 You have to convince them that there are multiple bidders. There’s no way, if it’s down to one, your on pretty thin ice.

John Warrillow:                Yeah. Yeah. And so, how did, how did you ultimately get them … so, I understand you made the case, what, what did they sort of capitulate quickly? How long did it take to get them up their offer from 130 to 150?

James Murphy:                 It took … well, it went through two different stages, but it took … it took about six or seven weeks.

John Warrillow:                Wow. What was that like to get the letter of intent that you ultimately signed? I’m assuming that as part of the letter of intent, just prior to commencing due diligence, you had to sign a, a no-shop clause where you gave exclusivity to C&D as they went through their diligence, is that right?

James Murphy:                 Well, no, I mean. Like, every company that came in was entitled to go into the data room so the merchant I, we had literally coordinated all of that so what they did was once we agreed to admit them into the process, they get with the bid and they commit to process, then we opened up the data room and then I had put together a team within my organization who literally were … so you had people in accounting, you had people in regulations, you had people in marketing, you had the data base IT, so … and then you had the various countries and so you had teams of people … I mean, one of the companies in the very late stages had almost 100 people working on this at any one time.

James Murphy:                 So, you know, you can imagine there was a lot of people working on information and we were putting up tons and tons of documents all up onto the data. It was an amazing experience but it was extremely professional and the more prepared you are, the more professional you are in terms of your ability to put up information when it’s requested, the easier and more confident that the inquiring company has.

John Warrillow:                So my understand is that your, you know, your top lieutenants, the CEO in the United States, your Chief Marketing Officer, your CFO, I’m assuming they had some participation, some equity in Viviscal which they were incentivized to buy as part of this exit. But what about the rest of the team that was working on the diligence? How did you … or did you incentivize them to, to help get this deal done because, clearly, you had to have dozens of people on staff to help through the diligence process?

James Murphy:                 So, you had the board, you had the senior management team, and then you had various teams in various countries and the whole base was in Ireland, porting all the countries. So, everybody benefited in some way from … everybody got a piece of the pie. Everybody, across the whole organization, number one.

James Murphy:                 Number two, some of the key people who were very much involved in, let’s say, the whole … either the negotiation or the due diligence, or indeed, we also had a transfer service agreement, so remember, it took us probably, nearly nine months, nine months plus, to transfer the business afterwards. So, everybody got rewarded, some rewarded more and then obviously the top team and the key people got rewarded with shares.

John Warrillow:                Got it. Got it. That makes sense. Take me through closing day. Do you remember where you were when the deal actually was closed? Maybe describe where you were and how that experience was that, the day that the deal was consummated?

James Murphy:                 Do you want the real story?

John Warrillow:                Please.

James Murphy:                 So, you remember it was the week in November 2017 when the Cubs won the world series?

John Warrillow:                I remember.

James Murphy:                 So, I grew up … I brought my family over to Chicago, we had the office in Chicago and so, on the Monday, Monday night we went to the NFL game where the Hawks, or, beat the Vikings for … was it the Hawks? Beat the Vikings, so-

John Warrillow:                Chicago Bears, I think, was the … is the-

James Murphy:                 No, no, no. The Bears, the Bears … well, this … so, we’re talking three different sports here. We’re talking football, we’re talking hockey … I think the hockey, it’s the Hawks, the hockey-

John Warrillow:                Blackhawks, yeah.

James Murphy:                 … and we’re talking … and baseball. Okay?

John Warrillow:                Okay.

James Murphy:                 So, I was at the football game on the Monday night but then the Tuesday and Wednesday was obviously the Cubs winning on the Wednesday night. Then Thursday we were, we ended up watching the Hawks beat the Vikings, so in that week, there was three unbelievably big games which was football, ice hockey and baseball and then on the Friday morning, I got the call from the merchant bankers to say that they had accepted the board of C&D had accepted the bid and accepted to pay 150 which … and the problem I had was that I had the whole day mapped out. It was meetings and everything else and I couldn’t exactly go, you know, down to the bank and go jumping around and all sorts of stuff. I just decided to keep my head focused until later on that evening because Ireland was playing against New Zealand in rugby and we had never beaten them and so on Saturday evening I was like a sponge because we beat New Zealand for the first time in 110 years!And the Cubs had beaten from 111 years and then the deal came through, it was like somebody had to squeeze me like a sponge on the Sunday.

John Warrillow:                That’s awesome! That’s awesome. Well, it’s an amazing story. I, I must … I must as you, James, I mean, it’s … I’m sure it’s been an emotional high with the, that week, how have you dealt with the inevitable let down of the months afterward? The months, sort of, after the deal has consummated here in 2018? How has that been emotionally for you?

James Murphy:                 Honestly, I’d say the year after the sale … well, first of all, in 2018, 2017 … yeah, sorry, 2017 … we literally, you know, we went to the transition services so we had a whole team of people and we’re kind of working out way, we had contracted … they had contracted us to continue to run a number of countries and pass it over and whatever else, so, we were kind of very much involved even though I was looking at lots of other businesses.

James Murphy:                 But honestly, John, I’d say the last year has been probably one of the toughest years for me because, you know, it’s great to go and build a brand from literally from scratch and make it the number one and sell it. It’s an amazing story. But then you going out to try and do it again. You’re trying to go out there and find the next one and it has been an amazingly tough slog trying to find another business that I can build into another Viviscal.

James Murphy:                 Now, we have found two or three things and we’re right down there to negotiation. I don’t want to take control, I want to buy a very significant share but if reminds me, inherently, what it was that we achieved because literally, we left no box unticked in terms of everything that needed to be place to get the absolutely full value. And when I look back, I take pride in the fact that we did get 150 because we deserved to get 150. Because when I go now and over the last year, and looking at the type of businesses that are naturally in [inaudible 00:49:22] way, but there are also problems with it. They just don’t get it.

James Murphy:                 You know, if you do something, do it right, do it well. And, you know, the advice to all you guys out there who listen, you know, you got to be professional about this. If you really want to get top dollar for your business, that means that it has to be properly financed. It has to have the best people you can afford and as you grow, and you don’t have the right people, then go and get the best people because some of the things that held me back were not people who weren’t good enough. We had a great product. We had great marketing. We pushed the boat trip many times and we could … we made lots of mistakes. We went into countries and lost a lot of money, but when we went into those continues and we knew that it wasn’t going to happen, we faded fast.

James Murphy:                 We cut our losses and got out. But there is so many things that I find companies are going in, they don’t have the technical trials to prove efficacy, they don’t have the distribution, their margins aren’t great, they’re not dealing, they don’t have secret sauce. I mean, it’s just lots and lots of things that they have to think about, otherwise it your going to spend so much time later on trying to figure out what they have to change to able to put it on the plate so it could be sold.

John Warrillow:                Such great advice, James. I’m so grateful for you sharing your story with us. What is, what … do you have an ask for my audience? Do you want them to go do something? Visit a website? Connect with you in some way? Where would you like people, what would you like people to do as a result of listening to this interview?

James Murphy:                 Honestly, what I would love them to do, any entrepreneur that has a business in excess of maybe one or two million, they should seriously seek out a course like I did so Stanford, you got Kellogg Institute in Chicago. You got a ton of institutes up there on the east coast. You got Stanford over on the west coast. You know, these things, these courses are, you could get one for two weeks, literally. I sent my CEO in the US on a course for two weeks. It was similar course to what I did. It was a kind of Leadership for Growth. It was a group type course.

James Murphy:                 If you go on that, what it does is number one, it takes you away from the office for two weeks. Number two, it puts you around … it puts you together with like-minded people who are probably in a very similar situation, who are not just America, there are international, who are in business that they [inaudible 00:52:01], that they live and breathe, and they want to grow. So you’re going to share lots of things. You’re going to have access to amazing professors and people who research this kind of stuff, time in and time out.

James Murphy:                 But lastly, and more importantly, you’re going to come away with some sort of vision that you’re going to have for this wonderful business of yours and you’re going to have to come away and write up a business plan and share with people. But the last thing I would leave you with, is remember, you have other stakeholders, and I keep saying this to people. One of the stakeholders that you have in your business at any time, is your family. Your wife and your kids and if you think that it’s all about you and your ego and going off to do it by yourself, you’re missing the point. You may have a great team inside the office and people who are willing to follow your vision and work as hard as hell with you, as long as they’re getting reasonable paid, but don’t forget your family. They are the ones that put up with you through thick and thin and at the end of the day, they’re the ones your going to share the success with so don’t forget about them at the beginning.

John Warrillow:                Which leads me to one final question, which I hadn’t planned to ask, but I, I must … do you have kids, James?

James Murphy:                 I have four amazing kids and … wife. Can’t ask for any more.

John Warrillow:                So how have you talked to the kids about this, I mean, this story, 150 million euros, was written up in the Irish Times. Everybody and their brother, I’m sure, in Galway knows you and knows the story. How have you talked to your kids about this event, the wealth that it’s created? What have you done to, sort of, get them, enable them to deal with it appropriately?

James Murphy:                 Well, first and foremost, I kind of left this until later on to tell them and what I did was, I sat down with them and, you know, told them that this thing was about to happen and it was going to close and whenever I was … but I’m lucky because it happened to them when the youngest was 21 and the eldest was 27. So, they have all come through life experiencing all the things any normal child would love to experience.

James Murphy:                 You know, without money interfering in any way, shape or form. The fact that they’re half Swedish and half Irish is great so we’ve been up and down to Sweden and they’ve got lots of relations. They are bilingual and all sorts of stuff so they’ve got great things going for them anyway. The youngest fellow, who is in college in Dublin, he just wanted to know for a fact that I wouldn’t put him into some expensive apartment. He wanted to share his year, last year, with five crazy guys in a house and do what they do in college and, I mean, that was the biggest concern he had.

James Murphy:                 The others just wanted to keep a low profile so I didn’t go out of my way to do interviews or to push it in any way so that everybody knew about it. We’ve kept a relatively low profile and when it’s easy to talk to you because you’re off there in Canada. I don’t need to worry too much about it. It’s probably how are you going to make it’s way back here, but its possible.

James Murphy:                 The last thing I did was I set up the Foundation. So, I made it very clear that, you know, I wasn’t going to go off and, you know, use the money to buy stupid things like planes or boats or … I hate all that rubbish. The Foundation for me is important because Life2Good as a name is about life. It’s about people, it’s about people who are probably less fortunate and so I, you know, when I’m looking at vulnerable women and children, I have all my family involved in that and this is something which is completely new, they more involved they are, they more they get to meet people who are less fortunate, so, you know, you can be foolish and make and have a lot of money and you can go out and blow it, you can buy things that make it clear that you love material things in life or you can try and do other things that maybe different for people who are less fortunate. To me that’s what I’m all about and that’s what I want to try and do with my family and everybody else. And who knows-

John Warrillow:                James Murphy.

James Murphy:                 … if I, if I find another business that I can buy into, it’ll be great. But it’s not about the money anymore. It’s about doing something else.

John Warrillow:                James, this was an incredible honor to meet you and spend this much time with you. Thank you for doing it.

James Murphy:                 John, it was a pleasure to talk to you and I wish all of your entrepreneurs out there the very, very best. Good luck in everything!


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