| Pub. Date | : October, 2021 |
|---|---|
| Product Name | : The IUP Journal of Accounting Research and Audit Practices |
| Product Type | : Article |
| Product Code | : IJARAP341021 |
| Author Name | : D Satish |
| Availability | : YES |
| Subject/Domain | : Finance |
| Download Format | : PDF Format |
| No. of Pages | : 19 |
WeWork, the New York-based start-up that revolutionized commercial real estate by offering flexible shared workspaces, attracted massive investments from the likes of SoftBank, Goldman Sachs, JP Morgan Chase & Company, and many other top private equity players. WeWork's valuation soared to more than $47 bn in January 2019. But its mandatory filing of S-1 papers on August 14, 2019 with the Securities and Exchange Commission (SEC) to go public left investors unconvinced, as they felt that the company did not deserve such a high valuation. WeWork's complex corporate structure, questionable corporate governance and business practices, and less than anticipated financial projections drove away potential investors. Adam Neumann (Neumann), WeWork's CEO, found himself in the middle of the controversy with some analysts questioning the transactions between him and WeWork. The controversy led to a failed Initial Public Offering (IPO) and to Neumann exiting WeWork. The case study captures the growth story of WeWork and its valuation journey through a series of findings. It delves deeper into the issues of complex corporate structures, a non-transparent corporate culture, questionable related party transactions, and iconic entrepreneurs and valuations which might not match the fundamentals. The case also gives an opportunity to students to analyze the Space-as-a-Service (SPaaS) industry, work out the relative valuation of WeWork with a close industry peer, and analyze the financial statements of WeWork.
When the whole system depends on the trust, when capital markets are booming and
people are investing in the markets if select people have access to results before it is
in the public domain, it is just not on. We're looking into it from all aspects: whatever
technological improvement is required, whatever system improvement is needed,
whatever legal and enforcement actions are required, we will do.1
- Ajay Tyagi, Chairman,
Securities and Exchange Board of India (SEBI) in 2017
We are a community company committed to maximum global impact. Our mission is to
elevate the world's consciousness. We have built a worldwide platform that supports
growth, shared experiences and true success. We provide our members with flexible
access to beautiful spaces, a culture of inclusivity and the energy of an inspired
community, all connected by our extensive technology infrastructure. We believe our
company has the power to elevate how people work, live and grow.1
- WeWork S-1 Document file with SEC on August 14, 2019
The eventual withdrawal of the IPO (WeWork) sends a clear message to entrepreneurs
and underwriters that they can no longer ignore shareholders' rights if they want
shareholders' money.2
- Amiyatosh Purnanandam, Senior Contributor CFO Network
and Professor of Finance, Michigan Ross
WeWork, the New York-based start-up that revolutionized commercial real estate by offering flexible shared workspaces, filed the mandatory S-1 paper with the Securities and Exchange Commission (SEC) to go public on August 14, 2019. In less than 10 years of its journey, WeWork had attracted the who's who of the world of private equity players, including SoftBank, Goldman Sachs, and JP Morgan Chase & Company. The Initial Public Offering (IPO) document brought out its bigger vision, couched in aspirational language. Its banner page read "We dedicate this to the energy of we-greater than any one of us, but inside all of us".