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WeWork Founder Adam Neumann Offers $500 Million To Relaunch Bankrupt Company: How Ousted CEO Returned To The Forbes’s Billionaires List

Last Updated March 26, 2024 2:30 PM
Giuseppe Ciccomascolo
Last Updated March 26, 2024 2:30 PM

Key Takeaways

  • Adam Neumann offered $500 million to buy WeWork.
  • However, WeWork has not expressed interest in Neumann’s offer and seems hesitant to negotiate with him.
  • It’s unknown how Neumann plans to finance the acquisition.

Adam Neumann, along with several partners, has made a bid exceeding $500 million  to acquire WeWork, marking a significant move towards reclaiming control of his once high-flying but embattled startup.

WeWork, previously valued at $47 billion, has filed for bankruptcy , yet Neumann is now aiming to revitalize its prospects with a potential relaunch. But the company doesn’t look willing to get Neumann’s help to exit its hard period.

Neumann Offers $500 Million

Neumann, alongside his real estate firm Flow, orchestrated a financing package for the co-working behemoth, as initially reported  by Bloomberg News in February. The Wall Street Journal revealed  on Monday, March 25, 2024, that Neumann has extended an offer exceeding $500 million to acquire the company.

According to a representative from Flow : “Two weeks ago, a coalition of half a dozen financing partners – whose identities are known to WeWork and its advisers – submitted a potential bid for substantially more than the Wall Street Journal reported.”

This bid marks another compelling chapter in the ongoing saga of WeWork and its enigmatic founder, which has been the focus of books, podcasts, a television series, and a movie. Once valued at a staggering $47 billion, WeWork emerged as Manhattan’s largest private occupier of office space.

However, the company’s fortunes took a sharp downturn following its ill-fated attempt to go public in 2019, revealing significant losses and contentious business practices. Neumann resigned in the same year in a bid to salvage the company. But WeWork’s financial woes persisted amid costly office leases and the challenges imposed by the Covid-19 pandemic.

Last year, the New York-based firm filed  for bankruptcy, disclosing $19 billion in liabilities against $15 billion in assets.

How Would He Finance The Deal?

How Neumann intends to finance the acquisition of the shared office space provider remains unclear at this time.

Last month, papers reported that Neumann and other investors, including Dan Loeb’s Third Point , were exploring the possibility of acquiring WeWork out of bankruptcy. However, individuals familiar with the matter stated  that Third Point is not participating in Neumann’s bid.

Neumann’s company, Flow, secured a $350 million investment from venture capital firm Andreessen Horowitz in 2022, valuing the company at $1 billion even before commencing operations. Flow specializes in managing multifamily residential properties that cultivate a sense of ownership and community.

WeWork has expressed no interest in being acquired by Neumann. In a statement  shared with Reuters, WeWork remarked: “WeWork is an extraordinary company, and it’s no surprise we receive expressions of interest from third parties on a regular basis. Our board and our advisers review those approaches in the ordinary course. This to ensure we always act in the best long-term interests of the company.”

Neumann’s Back In Forbe’s Billionaire List

Neumann’s journey in the business world has been nothing short of remarkable. Prior to the ascent of WeWork, he was absent from the Forbes billionaire list . However, with the launch of WeWork and its valuation soaring to an astonishing $47 billion, Neumann swiftly ascended to join the ranks of Forbes’ billionaires, marking his debut around 2017.

Yet, this meteoric rise was followed by a sudden downturn. In 2019, WeWork’s botched IPO and subsequent revelations led to a sharp decline in Neumann’s net worth. It resulted in his removal  from the list.

Adam Neumann wealth history
Adam Neumann wealth history. l Source: Forbes

Nevertheless, WeWork’s foray into a SPAC in 2021 breathed new life into Neumann’s financial prospects. And propelled him back onto Forbes’ list in 2022. Following the merger of WeWork with BowX Acquisition, Forbes estimated the value of Neumann’s shares at $1.6 billion. Despite the merger valuing WeWork at $9 billion, notably lower than its private market valuation of $12.7 billion, additional financial assets held by Neumann were anticipated to be converted into shares. This added another $200 million to his wealth.

As of March 2024, Forbes now assesses Neumann’s net worth  at $2.3 billion. This value ensures his continued presence among the world’s wealthiest individuals.

Controversies On Neumann

Since departing from WeWork, Neumann has resurfaced in a leadership role. He founded a new venture centered on the residential real estate market. His company, Flow Global, secured a substantial $350 million investment from the prominent venture capital firm Andreessen Horowitz in 2022 to propel Neumann’s vision of branded apartments. Think of it as WeWork, but tailored for renters.

Once hailed as the visionary leader of the company he co-founded in 2010, Neumann was ousted in 2019 following WeWork’s botched attempt to enter the US stock market. Despite his departure, as a significant company shareholder, Neumann negotiated an exit package valued at nearly half a billion dollars. This comprised $245 million in company stock and $200 million in cash. The aftermath of his departure shed light on Neumann’s tumultuous leadership style, eventually inspiring the 2022 Hulu miniseries “WeCrashed.”

WeWork‘s advisers have displayed reluctance to engage in negotiations with the company’s former CEO. Neumann’s legal team has cited a “lack of engagement” from WeWork, claiming they haven’t provided the necessary information for Neumann to formulate an offer to acquire the company or address its debt. According  to the financial figures, WeWork carries more than $4 billion in debt.

In a letter, Neumann’s lawyers highlighted previous instances where WeWork had sidelined him from crucial decisions. For instance, when Neumann attempted to secure up to $1 billion in financing to stabilize WeWork in October 2022, the company’s then-CEO, Sandeep Mathrani, abruptly terminated the process without explanation. Even as participants were en route, rendering them unable to proceed.

Flow and WeWork did not immediately respond to a request for comment.

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