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Soon after laying off employees, WeWork sells Managed by Q unit, which results from the company’s need to cut its costs and unload assets.
The U.S.-based provider of shared workspaces for technology startups and services for other enterprises WeWork sells Managed by Q unit acquired earlier this year. As the company’s spokesperson stated, the sum of purchase made up about $220 million at that time, however, now the deal will cost less than a quarter of this price.
According to Bloomberg, the decision to sell Managed by Q results from WeWork’s need to cut its costs and unload assets. Currently, WeWork is in private talks with potential buyers. As WeWork sells Managed by Q, it hopes to solve its financial problems. However, this is unlikely to help.
Dan Teran, a founder of Managed by Q, helped to sell the firm to WeWork in April. Last week, during the SALT conference in Abu Dhabi, he spoke about possible re-acquisition. He told:
“I’m actively working to buy back my company. And here I am six months later doing it again.”
Hard Times for WeWork
Founded in 2010, WeWork was an up-and-coming startup that promised long-term prosperity. The firm did quite well offering shared workspaces and related services. But this year turned out to be disappointing for WeWork and the company suffered hard times. Because of the crisis, WeWork abandoned its IPO plan, forfeited its CEO Adam Neumann, and found itself on the brink of bankruptcy. This difficult situation is mostly the result of improper corporate practices of Neumann, improper valuations of the company, and withdrawal of its IPO.
In November, WeWork announced it was going to lay off 2,400 (or 20% of its workforce). Besides, it decided to transfer 1,000 maintenance workers to outsourcing agencies in order to lower the human resource running costs. What is more, WeWork started to close its arms in various fields. In October, WeWork shut down its educational unit WeGrow. The arm was opened last year and had about 100 students enrolled. The company has also closed its restaurant-based coworking subsidiary Spacious and found a buyer for Conductor, a producer of marketing software.
Softbank, which is the biggest WeWork’s investor, was doing its best to rescue WeWork. In October, SoftBank made an attempt to save the firm with a capital infusion of about $8 billion. As we have reported, Softbank provided the company with a line of credit of about $5 billion in new financing with a fast cash infusion of $1.5 billion which WeWork needed. But all these initiatives did not save the real estate company.
WeWork’s team members try hard to win in this crisis. As they have explained, selling the company’s side businesses is a part of the survival plan. Anyway, we will closely observe further events and hope for the better for WeWork.