Accell Group, the owner of reputable cycling brands like Raleigh, has filed for insolvency under Dutch law. This insolvency filing comes months after KKR and other investors lost their entire €1 billion+ equity investment in the company.

KKR and other investors bought out Accell for €1.8 billion in 2022, betting on the pandemic-era surge in demand for e-bikes. However, the demand for e-bikes was not sustainable and the sales growth on these bikes came in below expectations.

This was a failed leveraged buyout. KKR bought out Accell on underlying assumptions that quickly began to unravel at the point of purchase. In addition to falling demand, Accell had over-ordered on parts in anticipation of sustained demand and supply chain disruptions meant these very components cost more.

KKR and the co-investors continued to pour hundreds of millions into the company after Accell began to struggle, but Accell continued to burn through cash till the point of insolvency.

What does this mean for the sector?

• The Accell collapse is a prominent example of the correction hitting private equity funds that acquired businesses on inflated demand assumptions

• The e-bike market specifically faces a credibility problem now as this sort of near-term demand volatility is going to drive away investors Particular brand assets like

• Raleigh may survive the Accell insolvency through a carve-out sale, demonstrating how IP and brand value can persist post-insolvency