But if there is an operative directive at Living Well today, it is neither public relations nor business as usual. It is acquisition. A peek at Fatjo's schedule illustrates the priorities. July 18, 8 p.m.: dinner with acquisition candidate in candidate's home. July 19, 9 a.m.-noon: meet acquisition candidate with Living Well senior vice-president Russell Harris. 1 p.m.: leave to meet second acquisition candidate . . . on and on, week after week. "It's beginning to feel like old times," observes Fatjo. Not only does it "feel" like the early days of BFI, it even looks that way: At least three of the members of Houstonian's eight-man acquisitions team -- FaCjo, Roger Ramsey, and David Ruth -- were involved with the building of BFI. The industry the team is exploring also seems strangely familiar. "We're just short of reaching an agreement with a company in the South that has 80 centers in 14 cities, says Fatjo, "and the major factor that has inhibited their growth is lack of capital. Fragmentation, the need for capital, lack of a national identity -- it's the BFI scenario all over again.
"So far," observes Milner, "we've found most of the people we've talked to to be extremely receptive. We've had our concept confirmed -- there's a genuine feeling out there that there's a need for one or two companies to assume a leadership position." As this issue of INC. went to press, Living Well was conducting serious discussions with 20 different organizations, and by the time you read this will probably have signed its first deal. By utilizing a variety of resources and options -- cash, stock, considerations based on the future success of the local operations, ongoing participation of management -- Fatjo hopes that, within five years, Living Well will have established a firm 50-market base, and will have enticed some 5 million Americans to sign up.
Initially, the acquirees will change little. Most of the clubs purchased will require no face-lifts or infusions of new people. "These are successful, well-run centers," says Milner, "and we re obviously anxious to hold onto the individuals who built them." Not even the names will change; the "XYZ" club in Atlanta, for instance, might simply become "XYZ -- A Living Well Center." Still, even in the early stages, Fatjo expects the new organization to have a major impact. The centers, for example, will become a significant part of the national marketing effort, with representatives selling Living Well programs to area institutions and signing up Living Well graduates to club memberships. The centers will also market a full line of health and fitness products. Fatjo has signed agreements with some 110 manufacturers, and a catalog is due out shortly.
Organizationally, as was the case with BFI, local operations will remain largely autonomous, but with guidelines, systems, materials, and support provided by headquarters. "My philosophy," Milner explains, echoing Fatjo's sentiments, "has always been to have as little centralized management as possible . . . particularly in a service business as personal as this." Houston will standardize reporting procedures and offer centralized computer services for fitness evaluations, recommended diets, and so on. Otherwise, the centers will be on their own.
Eventually, Fatjo expects a certain evolution, a synergy of engaging gears, to take place. Clubs may adopt a more uniform appearance and approach to fitness training, and may offer Living Well courses in-house. Living Well preventive-medicine centers, like the one at The Houstonian, may spring up in conjunction with local hospitals. Fatjo is thrilled about all the possibilities. The company in the making, in short, really is a potential "IBM of fitness."
CDC, Bally, and others will not, of course, sit idly by. "We're very familiar with what Fatjo's doing," says Stephen M. Ruff, national product line manager for CDC's StayWell program. "We've researched all of those kinds of things and, for the moment, we intend to stick with a worksite-based concept -- which is not to say that we might not do something different in the future."
William Peltier, vice-president/corporate communications for Bally, observes, somewhat critically, "Fatjo's going to have to hustle to catch up with these guys [HTCA's Zurkowski and Wildman]." He notes that HTCA is still looking at clubs it might acquire, and recently completed renovating one in Morton Grove, Ill., that it bills as "the biggest in the world." Peltier doesn't exactly issue a challenge -- but, he says, "Bally doesn't mind good competition."
"I hope [Fatjo's] got very deep pockets," observes another Bally spokesperson.
So far as Fatjo knows, however, none of his competitors are undertaking the mission he has set for himself -- a combination of corporate fitness programs, premiere and satellite health facilities, preventivemedicine centers, instructional materials -- everything, right down to the vitamins and the jogging clothes. And he has no doubt whatsoever that he can pull it off, competition or no.
"We've been involved in the acquisitions process for six weeks," says Fatjo, "and, based on that, I'm convinced this is an industry waiting to be born. The field is more fertile, and it's certainly much larger, than the one we encountered with BFI.
"I want to be careful not to convince myself that, just because we did it at BFI, We'll be able to do it again," he adds. "BFI represented an incredible opportunity, and it was a success, but today . . . " He pauses, grows thoughtful. "Today, success is in front of us, and we just have to do it again. You've got to be a believer."
