WeWork co-founder Adam Neumann, in a bold move, has bid over $500 million to reclaim the reins of the struggling office-sharing group he co-founded. This bid, backed by investors like Dan Loeb’s Third Point, signifies a renewed hope in WeWork’s revival from bankruptcy and a potential resurgence of its business.
Despite its initial promise to revolutionize office sharing, WeWork’s value has plummeted from its peak of $47 billion. It is currently grappling with high operating costs, a situation that has pushed it into bankruptcy. The process has been further complicated by reports of WeWork withholding substantial rent payments from landlords as it attempts to renegotiate its leases.
Neumann, who stepped down as CEO in 2019 after the company’s stock market debut was postponed and its value cut, still holds a significant stake in the flexible workspace operator. However, the former co-founder’s reputation as an unreliable leader- known to work through the night and make abrupt decisions- has raised concerns about whether he is qualified to run WeWork once again, The Information reported.
Investors have been skeptical of WeWork’s financial prospects, and its rapid expansion led to a series of costly missteps. Those included overvaluation, unsustainable growth, and poor corporate governance, including concentrating voting rights in Neumann’s hands and his personal use of business assets. Its management issues also eroded investor, employee, and public trust, with Neumann’s unpredictable leadership, conflicts of interest, and excessive spending drawing criticism.
It needed to be clarified how Neumann would finance such a deal, as his offer does not have the support of his existing investors. He had been discussing his plans with Flow, an investment fund backed by Andreessen Horowitz and other private equity funds. However, a representative of Flow said that the partnership “has only preliminary conversations” with Neumann.
WeWork’s bankruptcy process has dragged on, and it is still being determined how long it will take for the company to emerge from Chapter 11. The company is expected to have several competing offers to buy it once it emerges from bankruptcy, The Wall Street Journal and CNBC reported Monday, citing sources familiar with the matter. SoftBank’s Masayoshi Son has readied a financing package to sideline Neumann further. According to The Journal’s source, he could invest billions of dollars in WeWork’s stock and debt, shifting his already diluted voting control to the Japanese conglomerate. The company has yet to confirm the report.
