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The We Company will no longer be going public anytime soon. According to the new CEOs, the decision to postpone its IPO was necessary to solve many of the company’s internal problems. For now, no new date has been set.
The We Company, WeWork’s parent company, has officially moved to withdraw its S-1 filing, with the intention of postponing its earlier announced and widely talked about initial public offering (IPO). The company’s intention to go public was initially announced on the 14th of August but has gotten a lot of backlash since then, especially because of the company’s governance structure.
WeWork has been consistently criticized for not just its governance structure, but also the company’s staggering expenditure rates, as well as alleged unacceptable behavior exhibited by co-founder, Adam Neumann. Recently, we reported that WeWork’s largest investor, SoftBank Group, was putting substantial pressure on Neumann to step down from the position.
Shortly after, Neumann announced he would step down leaving new co-CEOs Artie Minson and Sebastian Gunningham, to take over. Now in a recent statement, the two chiefs have explained that the postponement was necessary for the company to turn things around.
“We have decided to postpone our IPO to focus on our core business, the fundamentals of which remain strong. We are as committed as ever to serving our members, enterprise customers, landlord partners, employees and shareholders. We have every intention to operate WeWork as a public company and look forward to revisiting the public equity markets in the future.”
The co-CEOs also took certain drastic steps in an effort to cut costs, as soon as they assumed the position. Firstly Neumann’s luxury private jet was put on sale to recoup some of the money spent. Furthermore, the chiefs decided to sell some of the company’s side businesses, which are unrelated to WeWork’s core function. Thirdly, the CEOs are seriously considering letting go of about 5,000 employees, representing about a third of the WeWork staff strength.
It is hoped that these steps will bring some much-needed sanity back into the company, and hopefully slowly prepare it for a public offering. However, the postponement is indefinite and it is uncertain when it will happen, although a fair assumption would be that the IPO would no longer take place in 2019.
Furthermore, WeWork was initially valued at $47 billion, a figure which seemed to irk many would-be investors and the general public, as it seemed like a gross overestimation. Much later as the IPO drew closer, the figure was slashed by more than 21% all the way down to $10 billion.
At the moment, however, SoftBank Group Corp., is considering pumping another $1 billion in a fresh investment round. However, this would mean that the two firms would have to revisit the agreement earlier agreed on, per the initial investments. Before WeWork’s issues took a considerable nosedive, SoftBank had concluded investment terms worth $1.5 billion. An additional $1 billion would take the number to a $2.5 billion total from the Japanese multinational conglomerate.
In addition, SoftBank founder, Masayoshi Son, along with his Vision Fund, has also pumped $10 billion in total, to WeWork. It is hoped that the change in governance structure and more steps to be taken by the current board, would give the company a fighting chance at an IPO and general success sometime in the near future.