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The Wild Story Of WeWork Gets Even Crazier Cofounder Adam Neumann Stands To Receive Up T0 1.7 Bil

The Wild Story Of WeWork Gets Even Crazier Cofounder Adam Neumann Stands To Receive Up T0 1.7 Bil
category : Art  10/22/2019 7:45:00 PM
By : midouyouness
A few short months ago, WeWork was Wall Street’s darling. The company was poised to go public and everyone—including the founders, employees and banks underwriting the IPO—anticipated making a fortune.

The foundation was laid for WeWork after the financial crisis—when real estate was cheap, unemployment was rampant and the gig economy started to emerge. They took the boring, shared-office-space concept, added kombucha on tap and the allure of working in a cool, hip, aesthetically pleasing environment and became one of the most highly valued unicorn companies.

WeWork opened new locations in the United States and all over the world. Investment bankers vigorously competed to bring the company public. However, WeWork started to become plagued by allegations of financial self-dealing (on the part of former CEO Adam Neumann), capricious behavior by his wife, Rebekah Paltrow Neumann (Gwenyth Paltrow’s cousin), questionable trophy acquisitions (such as a wave pool operator) and an uncomfortably high burn rate of cash. Investors’ pushback on the sky-high $47 billion valuation put pressure on the investment bankers to shelve the IPO deal.

Since the scuttled IPO, the financial scene at WeWork has become dire and of great concern to its investors. On Tuesday, the Wall Street Journal reported that SoftBank—a Japan-based conglomerate that owns a large stake in WeWork and an array of other tech-related companies—received approval from the Board of Directors to wrest control away from cofounder Adam Neumann. It's an expensive move for SoftBank, as it’ll offer Neumann up to $1.7 billion to forfeit control.

Video Player is loading. Play Unmute Current Time 0:05 / Duration 0:18 Fullscreen x Financial Markets Wall Street (AP Photo/Mark Lennihan)ASSOCIATED PRESS A few short months ago, WeWork was Wall Street’s darling. The company was poised to go public and everyone—including the founders, employees and banks underwriting the IPO—anticipated making a fortune. The foundation was laid for WeWork after the financial crisis—when real estate was cheap, unemployment was rampant and the gig economy started to emerge. They took the boring, shared-office-space concept, added kombucha on tap and the allure of working in a cool, hip, aesthetically pleasing environment and became one of the most highly valued unicorn companies. WeWork opened new locations in the United States and all over the world. Investment bankers vigorously competed to bring the company public. However, WeWork started to become plagued by allegations of financial self-dealing (on the part of former CEO Adam Neumann), capricious behavior by his wife, Rebekah Paltrow Neumann (Gwenyth Paltrow’s cousin), questionable trophy acquisitions (such as a wave pool operator) and an uncomfortably high burn rate of cash. Investors’ pushback on the sky-high $47 billion valuation put pressure on the investment bankers to shelve the IPO deal. Since the scuttled IPO, the financial scene at WeWork has become dire and of great concern to its investors. On Tuesday, the Wall Street Journal reported that SoftBank—a Japan-based conglomerate that owns a large stake in WeWork and an array of other tech-related companies—received approval from the Board of Directors to wrest control away from cofounder Adam Neumann. It's an expensive move for SoftBank, as it’ll offer Neumann up to $1.7 billion to forfeit control. SoftBank will purchase about $1 billion of stock in WeWork’s parent from Neumann, extend him a $500 million credit line to help repay a loan from J.P. Morgan, a main banker for the real estate company, and issue a $185 million consulting fee. This is on top of the estimated $700 million that Neumann previously cashed out of the company. The value of the company imploded from a pre-IPO valuation of $47 billion to now about $8 billion. Without the funds anticipated from the IPO, WeWork is planning on laying off thousands of its employees. It's been reported that the company, short on cash and lacking sufficient resources, may be unable to pay severance packages to its departing former employees. There are open-ended questions as to whether or not they’ll receive any stock owed to them.

Video Player is loading. Play Unmute Current Time 0:05 / Duration 0:18 Fullscreen x Financial Markets Wall Street (AP Photo/Mark Lennihan)ASSOCIATED PRESS A few short months ago, WeWork was Wall Street’s darling. The company was poised to go public and everyone—including the founders, employees and banks underwriting the IPO—anticipated making a fortune. The foundation was laid for WeWork after the financial crisis—when real estate was cheap, unemployment was rampant and the gig economy started to emerge. They took the boring, shared-office-space concept, added kombucha on tap and the allure of working in a cool, hip, aesthetically pleasing environment and became one of the most highly valued unicorn companies. WeWork opened new locations in the United States and all over the world. Investment bankers vigorously competed to bring the company public. However, WeWork started to become plagued by allegations of financial self-dealing (on the part of former CEO Adam Neumann), capricious behavior by his wife, Rebekah Paltrow Neumann (Gwenyth Paltrow’s cousin), questionable trophy acquisitions (such as a wave pool operator) and an uncomfortably high burn rate of cash. Investors’ pushback on the sky-high $47 billion valuation put pressure on the investment bankers to shelve the IPO deal. Since the scuttled IPO, the financial scene at WeWork has become dire and of great concern to its investors. On Tuesday, the Wall Street Journal reported that SoftBank—a Japan-based conglomerate that owns a large stake in WeWork and an array of other tech-related companies—received approval from the Board of Directors to wrest control away from cofounder Adam Neumann. It's an expensive move for SoftBank, as it’ll offer Neumann up to $1.7 billion to forfeit control. SoftBank will purchase about $1 billion of stock in WeWork’s parent from Neumann, extend him a $500 million credit line to help repay a loan from J.P. Morgan, a main banker for the real estate company, and issue a $185 million consulting fee. This is on top of the estimated $700 million that Neumann previously cashed out of the company. The value of the company imploded from a pre-IPO valuation of $47 billion to now about $8 billion. Without the funds anticipated from the IPO, WeWork is planning on laying off thousands of its employees. It's been reported that the company, short on cash and lacking sufficient resources, may be unable to pay severance packages to its departing former employees. There are open-ended questions as to whether or not they’ll receive any stock owed to them. Neumann, who is currently the chairman of the We Company, is anticipated to relinquish his seat on the board. He will keep a stake investment in the company and continue as a board observer. Questions are raised to the legitimacy and fairness of Neumann walking away from the company with over a billion-dollar fortune, while leaving WeWork employees and others in desperate straits.


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