How WeWork Is Battling The Backlash Ahead of Embattled IPO Listing

Real Estate

Topline: WeWork announced that it will institute a series of corporate governance changes and limit the influence of chief executive Adam Neumann, in the hopes of addressing growing investor concerns ahead of its planned IPO later this month.

Key Background: WeWork has attracted a great deal of market scrutiny over its corporate governance—particularly Neumann’s complete control of the company, and whether it can reverse steep profit losses.

  • In a regulatory filing released on Friday, WeWork’s parent company, the We Co., released more details about its IPO and outlined a plan to change its corporate governance as it seeks to bolster its decreasing valuation.
  • The new filing revealed that Neumann will return any profits he receives from real estate transactions with WeWork, that his successor will be selected independently by a board of directors, and no member of his family will be allowed to sit on the board.
  • Neumann’s voting rights were scaled back—from 20 votes per share to 10 per share, and he will only be allowed to sell 10% of his shareholdings in the years after the IPO offering.
  • WeWork will list its shares on the Nasdaq Index, making its trading debut the week of September 23rd. 
  • The company will set a preliminary price range as early as next week, but its advisers are expected to target a valuation that could fall below $20 billion, according to The Wall Street Journal—a far cry from its $47 billion private funding valuation earlier this year.

What we don’t know: How Neumann thinks about these proposals. He has yet to comment.

Key Statistics: In addition to corporate governance, investors have remained doubtful over whether WeWork can become profitable, a problem encountered earlier this year by other high-flying IPOs such as Uber and Lyft. We Co. disclosed in its filings that it had already lost almost $700 million in the first half of this year—and had lost $2.9 billion over the last three years.

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