Where is the private equity partner excited about the deal that lost $1bn?

What happens when you're a partner at a private equity firm and a deal that you worked on makes a 10 figure loss? In theory, private equity dealmakers have their incentives aligned via carried interest. In fact, they may not hang around long enough to see the loss on a particular deal crystallize. 

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Timothy Franks had a long and lucrative career in private equity. Franks, who did not respond to an invitation to comment for this article, began his career in 1999 after a brief time in investment banking at Deutsche Bank and then Credit Suisse. He became a partner at Advent International and then at KKR. 

One of the investments Franks was involved in at KKR lost $1.3bn this week, but he may not mind. He left the fund a year after it was made.

As head of the EMEA consumer group at KKR, Franks fronted the fund's €1.1bn ($1.3bn) investment in Dutch e-bike maker Accell Group in 2022, and lists it among his achievements on his LinkedIn profile. When the deal was done, Franks said he was excited for its potential. “ Accell Group’s transport and mobility solutions have been a thematic investment focus for KKR for some time, and we believe that the bicycle sector and e-bikes in particular will play an increasingly important role in dealing with some of the major challenges the world is facing today...", he declared, adding that KKR's investment would help Accell to realize "its full potential as a global industry leader and sustainable innovator.”

Accell did not achieve its full potential. After over-ordering inventory, it instead faced a sales slump that threatened it with bankruptcy until its debts were restructured this week, resulting in KKR losing its $1.3bn investment.

The episode is a reminder that private equity is not a one way street. Accell's issues started surfacing in mid-2023; Bloomberg reported that Franks decided to leave in July of the same year. His exit may have been coincidental. An entire team at KKR worked on the deal.

Some of Franks' other investments at KKR have fared much better. He also participated in KKR's purchase of a 60% stake in Wella in 2020. Reuters reported in January that Wella is preparing for an IPO which will value the company at far more than KKR paid for it. 

After leaving KKR, Franks became CEO of "purpose driven" investment firm Jacobs Holdings, but he stepped down from that role last year. 

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