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Summary
- Co-working real estate giant WeWork is likely to adopt the SPAC route to go public.
- If the deal is struck, WeWork will see a valuation of US$10 billion, much less than Soft Bank’s own 2019 valuation of US $47 billion.
- The year 2020 saw US$75 billion raised by 219 SPAC IPOs and 2021 has already started on a stronger note with more than 80 SPAC debuts.
After a failed attempt in August 2019, coworking real estate giant WeWork is back in the news for a second attempt to go public via a special purpose acquisition company (SPAC), according to several news reports.
The coronavirus-induced economic slowdown has made SPAC IPO's the most viable alternative over traditional IPOs. In 2020, nearly US$75 billion was raised by as many as 219 SPACs.
Founded in 2010 by Adam Neumann, what was then a single coworking outpost in SoHo, New York City, WeWork converted into a formidable entity with more than 500,000 users across 111 cities and 29 countries in less than a decade – thanks to cash flows from venture capitalists, most notably SoftBank, which continues to hold 80 per cent stake today.
The high fly stopped when WeWork lost US$2 billion in 2018 that played a crucial role in the company's attempt to go public in the fall of 2019.
WeWork’s not so very impressive financial documents suggested attempt to veil losses by using expressions like, “community adjusted” EBIDTA.
The fall of WeWork has been largely attributed to the extravagant lifestyle of its former CEO and co-founder, who landed the company into unnecessary controversies, which had an impact on its public perception and image.
@Kalkine Image 2020
As per available media reports, Mr Neumann drove around in a Maybach sedan that cost upward of US$100,000 and travelled the world on a $60 million Gulfstream G-650 aircraft.
Together with his wife Rebekah Paltrow Nuemann, the couple owned a 6000-square-feet Gramercy condo in Manhattan that costs US$90 million and a 60-acre estate in Westchester County, New York, a US$21 million mansion in San Francisco Bay Area that featured a guitar-shaped room.
At his peak, Mr Nuemann pitched himself as the gatekeeper and guardian of next-generation work culture. Any investor who walked in with skepticism, walked out being convinced of what he told them during meetings with shots of Don Julio.
They saw a millennial prophet in the quadragenarian entrepreneur preaching about the dawn of a new corporate culture.
According to several media reports as a part of Neumann's exit package, he was slated to receive almost US$1 billion from SoftBank, which was later cancelled.
Though there has been no official statement from either of the companies, the SPAC route may be the most viable exit that WeWork direly needs.
