Higher Power Inc., which owns and operates two health and fitness e-commerce sites, has sold the majority interest in the company to a private equity firm.
Terms of the deal weren’t disclosed, but the majority of Higher Power, which operates Bodybuilding.com, No. 163 in the Internet Retailer Top 500 Guide to Retail Web Sites, is now owned by Milestone Partners, a St. Davids, PA, investment banking firm with an interest in companies ranging from $10 million to $100 million in annual sales. Milestone now owns 60% of the company.
Founder and CEO Ryan DeLuca will continue to have a 40% stake. "We didn't want to 'cash out' because we are confident in the future and in the business, so we kept 40%, which is a good chunk," DeLuca says. "I am still CEO and we have the same management team, employees and business strategy. We never had any financial problems and we are still growing the top and bottom line at a record pace."
The deal was brokered by New York investment banking firm Goldsmith, Agio, Helms. “Bodybuilding.com is remarkably profitable for an Internet retailer,” says Goldsmith, Agio, Helms director Jim Clancy. “Milestone will help the company improve its sophistication in systems and infrastructure.”
Bodybuilding.com is on track to generate web sales of more than $60 million in 2006. "We were only looking for an investor in order to diversify the owner's wealth," DeLuca says. "We had way too much tied up in Bodybuilding.com, and we were looking to take some risk off the table. We also were looking for a partner to help take us to $150 million as fast as possible. We started this business with our own money and grew it without any debt."
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