The e-bike giant has declared bankruptcy.

What a bitter irony.

At the start of August, European bicycle leader Accell Group announced the launch of bankruptcy proceedings.

It may sound unfamiliar, but its brands almost dominate half of the European bicycle market. At its peak, it owned a host of well-known brands including Batavus, Sparta, Koga, Lapierre, Haibike, Ghost and Raleigh, once ranking No.1 in the European e-bike market.

This is also a rare failed investment for KKR.

Back in 2022, a KKR-led consortium acquired Accell for approximately 1.56 billion euros, with equity contributions exceeding 1.1 billion euros. In February this year, KKR handed over control of the company to its creditors, and its initial equity investment was almost wiped out. Including subsequent capital injections, the total investment in this project exceeded 10 billion yuan.

Booming Amid the Pandemic

KKR Bought a Bicycle Business

Why did KKR set its sights on a bicycle company?

Back in 2020, when the pandemic swept across the globe and public transport was restricted, global demand for outdoor sports surged, and bicycles, especially e-bikes, ushered in unprecedented prosperity. Green travel, urban mobility, and personal health — almost every keyword aligned with the hottest long-term investment themes at that time.

Accell became one of the most standout companies in this wave. In 2021, Accell recorded revenue of 1.377 billion euros, with EBIT reaching 110 million euros, a year-on-year increase of 47.3%. The e-bike, cargo bike and parts businesses together painted a compelling growth picture.

KKR stepped in.

In January 2022, KKR, in partnership with Dutch investment institution Teslin, launched an all-cash acquisition offer for Accell at 58 euros per share, for a total consideration of approximately 1.56 billion euros. This price represented a 26% premium to the closing price before the announcement, and was even about 21% higher than Accell's all-time highest closing price of 48 euros.

KKR shared its investment logic: climate change, urban mobility and personal health will drive bicycles, especially e-bikes, to play an increasingly important role in the global transportation system. After privatization, Accell could get rid of the short-term performance pressure from the public market, and accelerate brand building, supply chain transformation, international expansion and mergers and acquisitions.

Everything seemed perfectly logical.

This deal was not even the most aggressive leveraged buyout. According to the plan disclosed at the time, the funds under KKR provided 1.15 billion euros in equity financing, with another 700 million euros in debt financing, and debt accounted for less than 38% of the total funds required for the transaction. The two parties also agreed that the net leverage ratio would in principle not exceed 5 times. The acquisition announcement described it as a "prudent capital structure".

But the hidden dangers obscured by the widespread prosperity had already piled up in the warehouses.

At the end of 2021, Accell's inventory grew rapidly, while its free cash flow stood at negative 127 million euros, and its net debt rose from about 50 million euros to 187 million euros. The better the bicycles sold, the more cash-strapped the company became.

At that time, the global supply chain was disrupted, and enterprises, fearing that they would not be able to get parts, kept placing orders in advance and hoarding inventory. As long as demand continued to grow, this practice could be sustained. No one expected that the parts and bicycles in the warehouse would quickly turn into a black hole devouring cash flow.

Behind the Bankruptcy

10 Billion Yuan Down the Drain

Risks at the peak rarely appear as bad news. They are more often disguised as growth, quietly lying in financial statements and warehouses. When everyone believes that prosperity will continue, the cycle has quietly reversed.

After the pandemic ended, Europeans returned to offices and public transport, and the bicycle consumption boom quickly faded.

However, bicycle manufacturers and dealers who had expanded production frantically and placed orders repeatedly filled their warehouses with unsold goods. The entire industry was overstocked, and to recover funds, they could only offer discounts. The lower the price, the thinner the profit; the thinner the profit, the harder it was to repay the debt.

In 2023, Accell's revenue fell by about 10% to 1.294 billion euros, and its annual net loss reached 390 million euros.

Inventory issues, restructuring and recalls broke out almost at the same time.

During this period, the Babboe incident dealt a heavy blow to Accell. In February 2024, the Dutch Food and Consumer Product Safety Authority found in an investigation that some Babboe cargo bikes had a risk of frame fracture, which could cause serious injury to users and children in the bikes, and immediately required it to stop selling all cargo bikes and recall multiple models.

With unsold inventory and a key brand facing sales suspension and recalls, Accell's cash flow continued to bleed.

At the same time, high interest rates kept pushing up debt costs. By 2024, Accell's debt had reached about 1.4 billion euros.

KKR had to join creditors in restructuring: cutting about 600 million euros of debt, reducing the operating group's debt to about 800 million euros, adding about 235 million euros of liquidity, and extending the maturity date to 2030. At that time, KKR still retained control.

In hindsight, this restructuring only bought one more year. In February 2026, Accell had to restructure again. KKR handed over control of the company to super-priority lenders, and once again provided capital and debt reduction for the company. KKR thus ended its controlling stake in Accell.

KKR expects to lose all of its approximately 1.1 billion euros in initial equity investment, plus hundreds of millions of euros in additional funds it later injected to stabilize Accell. Calculated in RMB, KKR's 10-billion-yuan investment is likely to be completely lost.

Enlightenment

The Acquisition Is Just the First Step

The investment circle is no stranger to KKR.

The pioneer of leveraged buyouts was founded in 1976. Its iconic deal in the 1980s was the acquisition of tobacco and food giant RJR Nabisco for more than 30 billion dollars, making it one of the most famous acquisition cases in financial history.

The basic logic of leveraged buyouts is not complicated: investment institutions acquire enterprises with a small amount of equity and a large amount of debt, and then use the cash flow of the acquired company to repay the debt. As long as operations improve and profits grow, shareholder returns will be multiplied.

But the reverse is also true. Once an enterprise's revenue declines and profits disappear, the debt will not decrease accordingly, and interest still needs to be paid. At this point, leverage is no longer a tool to boost returns, but a heavy weight that crushes cash flow.

Therefore, what really determines the success or failure of an acquisition is never the day the deal is closed, but the years after the acquisition.

Henry Kravis, co-founder of KKR, has a famous quote: "Our work truly starts on the day we buy the company."

This is also why modern PE firms are increasingly emphasizing the importance of "Operational Value Creation". Today, almost all large PE institutions have set up dedicated operation teams, hoping to gradually shift from financial investment to operational investment.

As Yu Liping, a leading figure in China's M&A circle who has presided over classic M&A cases such as Geely Auto's acquisition of Volvo Cars, once shared with the investment community, post-merger integration is far more important than the acquisition itself. The success of a project is not defined by the completion of the deal alone. We need to look three years ahead to see if the strategic and integration plans set at the initial stage of the acquisition can be achieved, so that the data and performance of the target enterprise can be improved. That is the true meaning of success.

Everyone understands this principle, but it is not easy to put it into practice. Even KKR, which knows this well, cannot avoid all risks. In 2023, Envision Healthcare, the US medical service provider that KKR acquired for about 9.9 billion dollars, filed for bankruptcy; in 2025, Marelli, the auto parts giant whose integration was led by KKR, entered bankruptcy proceedings again.

Of course, one or two failed deals cannot erase KKR's track record over the past half century. Just this year, KKR has obtained returns of several times or even more than ten times through multiple projects.

At present, the entire PE industry is undergoing re-pricing.

In the low-interest rate era, PE returns benefited to a large extent from cheap debt and valuation multiple expansion. Statistics from McKinsey show that between 2010 and 2022, these two factors contributed 59% of buyout investment returns. Today, the environment of cheap capital and easy valuation growth is gone. Operational improvement has changed from a "plus item" in investment institutions' promotional materials to a core capability that determines returns.

Leveraged buyouts have not failed. It is just that the era of making easy profits relying on low-cost capital, rising valuations and time dividends is fading away.

Capital can buy a company, but it cannot buy the future of a company. A transaction can be completed in one day, but the real value of an enterprise can only be built little by little over a long period of time through operation.

This article is from the WeChat official account "pedaily2012" (ID: pedaily2012), written by Chen Jia, and authorized for release by 36Kr.