Billionaire WeWork cofounder Adam Neumann was pressured out as CEO after the coworking startup’s failed IPO in 2019. However with WeWork now going through bankruptcy, he needs one other shot, and is keen to purchase out your complete firm to get it.
Neumann and his $350 million real estate startup Flow have for months been making an attempt to purchase WeWork with financing from Dan Loeb, the founding father of New York-based hedge fund Third Level, the New York Occasions DealBook reported, citing a letter despatched from Movement to WeWork. The corporate has additionally proposed shopping for out WeWork’s belongings or offering chapter financing to maintain it afloat, the Occasions reported.
However Neumann and WeWork’s messy breakup continues to be contemporary within the minds of WeWork’s high brass, who’re apparently lower than enthusiastic in regards to the former CEO taking on.
Movement’s letter to WeWork claims that the bankrupt coworking firm has stonewalled Movement’s makes an attempt to make a buyout provide, failing to supply wanted info regardless of repeated requests and conferences since December.
“We write to express our dismay with WeWork’s lack of engagement even to provide information to my clients in what is intended to be a value-maximizing transaction for all stakeholders,” Movement’s legal professionals wrote within the letter to WeWork.
Movement didn’t instantly reply to Fortune‘s request for remark.
WeWork was once valued at $47 billion, partly due to large capital infusions made by SoftBank CEO Masayoshi Son, but it surely collapsed partly on account of timing. The corporate entered into a number of long-term leases signed on the top of the workplace market simply earlier than the COVID pandemic led to a surge in remote work.
Neumann, nonetheless, was capable of make out with a internet value of upwards of $2 billion (though his internet value fell to $1.7 billion in November), because of sweetheart leasing deals and payouts from WeWork together with shares within the firm.
Since Neumann’s departure from WeWork, his upscale life-style and authoritative and unconventional administration fashion have obtained quite a lot of scrutiny in a documentary, a TV collection and a number of other books. In a type of books, Cult of We, two Wall Road Journal reporters element some egregious examples even for the high-flying startup world. Neumann partied hard in private planes whereas different high executives flew coach, the e-book reported; he and a cofounder additionally trademarked the phrase “We,” and charged WeWork $5.9 million to make use of it in firm branding.
Even after his ouster in 2019 following WeWork’s failed IPO, Neumann has frequently taken an curiosity within the failing coworking firm he helped begin greater than a decade in the past. Neumann has mentioned WeWork’s chapter was “disappointing,” and mentioned in a November assertion that the corporate may do higher.
“It has been challenging for me to watch from the sidelines since 2019 as WeWork has failed to take advantage of a product that is more relevant today than ever before,” he mentioned within the assertion.
The previous WeWork CEO informed Fortune in July that he had signed a non-compete and non-solicit settlement with the corporate however that it expired in October. As for his startup Movement, Neumann mentioned its solely choices had been to “compete or partner” together with his former firm.
A spokesperson for WeWork mentioned in an announcement to Fortune that Movement and Neumann’s provide is only one of many it receives from events often.
“We continue to believe that the work we are currently doing – addressing our unsustainable rent expenses and restructuring our business – will ensure WeWork is best positioned as an independent, valuable, financially strong and sustainable company long into the future,” the WeWork spokesperson mentioned.
Third Level, in the meantime, distanced itself from Movement after the letter grew to become public, telling Fortune in an announcement that it has solely had “preliminary conversations,” with Neumann and Movement about financing a WeWork buyout, and that it “has not made a commitment to participate in any transaction.”
Regardless of the unhealthy blood between Neumann and WeWork, Movement’s legal professionals mentioned WeWork ought to contemplate the buyout provide for the sake of getting essentially the most out of the corporate.
“WeWork should at least educate itself about that potential and not preclude itself from maximizing value,” the legal professionals wrote.
