To describe what has happened in the bicycle market over the past two and a half years, the internet has coined its own term: Bikepocalypse. A sense of doom spread across the industry. „Quite a number of companies really struggled“, says Burkhard Stork, Managing Director of the German Bicycle Industry Association (ZIV). And some didn’t make it – brought to their knees by cautious consumers, overflowing inventories, and aggressive discounting. But slowly, the situation is easing – including for investors.

What happened? It was a classic boom-and-bust cycle, triggered during the pandemic: People wanted to get outdoors – and preferably by bike. Demand, especially for expensive e-bikes, skyrocketed. The result was supply bottlenecks and sharply rising prices. Suddenly, bicycles became big business.

By the end of 2020, investment firm GBL took a reported 400 million euros stake in direct-to-consumer brand Canyon, known for its sporty bikes. In mid-2021, Dresden-based online bike retailer Bike24 went public, raising around 300 million euros together with majority shareholder Riverside. In January 2022, KKR made a 1.6 billion euros offer for Accell Group, Europe’s largest bike manufacturer and parent of brands like Haibike, Ghost, and Babboe – taking the Dutch company private.

But the rapid ride ended abruptly. In February 2022, Russian troops invaded Ukraine. Energy prices and the cost of daily living soared. Expensive bikes were suddenly low on consumers’ priority lists. Yet manufacturers had already ramped up production, supply chains were back on track – and dealer warehouses were filling up. The industry plunged into its deepest crisis in decades.

„Private equity investors burned their fingers in many cases – no question about it“, notes Stefan Mohr of EY. „But they’ll return once profits are back on the horizon.“ He expects bike sales to start picking up again next year. „The reduction in inventory levels signals that the downturn may be ending. But there will still be insolvencies – just fewer than in recent years.“

Mohr and his EY colleagues recently presented an analysis of the European bicycle industry at the Eurobike trade fair in Frankfurt. „Cycling remains a fundamentally growth-oriented segment. We're still one-third above pre-2019 market levels – that’s often overlooked“, says Mohr. By 2030 at the latest, the market’s annual revenue should surpass the previous peak seen in 2022.

Stork shares that view: „Sentiment was never truly bad, because everyone knew: we have the right product.“ None of the ZIV’s member companies disappeared entirely, he notes. „But there have been shifts in ownership structures, takeovers, and mergers.“ In short: The previously fragmented, family-run bicycle industry is entering a phase of consolidation.

„It’s the era of strategic investors“, says Ralf Kindermann of Kindermann Value Creation, who hosts the Investors Lounge at Eurobike, bringing companies and investors together. He estimates that deal flow is currently less than half of what it was two or three years ago. His view aligns with EY’s data, though the consultancy sees the decline as less severe.

„No one is taking unnecessary risks at the moment“, observes Kindermann. Pricing expectations remain far apart: Sellers still recall the high valuations of the boom years, while private equity investors now need to put more equity on the table. The good news: Kindermann doesn’t see panic in the market. „I’m not seeing fire sales.“ He expects regular exits to begin in 18 to 24 months – provided conditions improve. „Private equity has become more patient and flexible.“

Not every corner of the industry is suffering, as Andrés Martin-Birner, CEO of Bike24, points out. „Performance bikes like road and gravel bikes are selling well, while urban bikes remain sluggish.“ That said, he admits that overall industry sales are still heavily driven by deep discounts on complete bikes, as inventories here remain high. In contrast, stock levels for components have largely normalised. „By 2026 at the latest, the industry should return to its long-term growth path“, predicts Birner.

Bike24’s own share price already reflects a turnaround: After debuting at 15 euros four years ago, the stock plunged below 1 euro early this year after the boom fizzled. Since then, the share price has steadily recovered, recently trading at around 2.50 euros. „Investors have returned“, notes Birner, pointing to rising trading volumes.

Private equity firm Riverside remains Bike24’s largest shareholder with a roughly 30% stake, while Rocket Internet has more recently taken a 10% position. „Our investors come from all over the world“, says Birner – including many cycling enthusiasts. „There aren’t many ways to invest in the bike industry on the stock market – except for Asian manufacturers like Shimano, Giant, or Merida.“

And as M&A adviser Kindermann notes, emotion often plays a role in cycling investments: „Road cycling is the new golfing. Many private equity managers regularly fly to Mallorca for their rides.“ But in the end, it’s all about the numbers. EY’s Mohr puts it plainly: „If I were an investor, I’d build a bike repair chain right now – something like ATU for bicycles. That doesn’t exist yet.“