WeWork’s Adam Neumann.
WeWork’s Adam Neumann.

WeWork co-founder’s fortune sinks as IPO hangs in balance

  • WeWork is considering changing various corporate governance practices, according to people aware of the situation
  • Any decision ultimately rests with Neumann, who maintains voting control through a three-class share structure

First, WeWork hit London. Then, Boston. Then, Toronto. Over the past six days, WeWork executives have raced from city to city in an attempt to win over increasingly sceptical investors.

But by the time the company’s Gulfstream G-6 touched down outside New York late Tuesday night, the grandiose ambitions of Adam Neumann, the company’s brash co-founder and pitchman, remained poised on a knife’s edge. His own fortune, while still enviable, was rapidly slipping away.

With WeWork’s valuation plummeting, anxiety is growing about when, how or even whether the hipster office-rental company should go public, with even its own bankers unnerved. In question, too, is where this now leaves other fast-growing, money-burning firms— the so-called unicorns.

WeWork’s predicament has exposed the gap between what private investors think a young company might be worth and what that firm might actually fetch in the stock market.

Neumann, who helped WeWork raise more than $12 billion while never turning a dime of profit, is said to be pressing ahead with plans for an initial public offering while simultaneously hunting for still more private capital.

At the same time, WeWork is considering changing various corporate governance practices, according to people aware of the situation.

Both of its lead financial advisers—JPMorgan Chase and Goldman Sachs—have concerns about proceeding with an IPO that could value the company as low as $15 billion, the people said, asking not to be identified because the talks are confidential. That’s set off a push to make the public sale more palatable to potential investors with governance reforms.

Any decision ultimately rests with Neumann, who maintains voting control through a three-class share structure and has been an adamant proponent of the IPO, the people said.

He also has been criticized for borrowing the firm’s money, leasing properties he owns back to the company and selling chunks of equity ahead of the planned IPO. The firm rents space in four buildings owned by Neumann, according to the prospectus. It signed a lease on three of them the day he obtained his stake, and committed to being a tenant in them within the next year.

Such disclosures—and the billions of dollars of losses the firm has racked up in recent years—increased unease among investors already frustrated by the lacklustre market debuts of Silicon Valley darlings such as Uber.bloomberg


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