WeWork Needed a Bailout—But Adam Neumann Still Leaves a Billionaire
WeWork’s value has tumbled, about 2,000 employees are being cut and many investors are nursing losses after the firm’s bailout.
But founder Adam Neumann is still a billionaire.
SoftBank Group Corp.’s proposed rescue package of WeWork involves Neumann selling about $1 billion of stock and getting a $185 million consulting fee from the Japanese firm even as the deal values the struggling office-sharing company at $8 billion, according to people familiar with the transaction. That’s down from an estimated $47 billion at the start of the year. Neumann will leave the company’s board though he still can assign two seats.
On these terms, Neumann’s net worth would be at least $1 billion, according to calculations by the Bloomberg Billionaires Index. While that’s a fraction of what it was on paper in January -- the last time SoftBank made an investment in WeWork -- it’s a remarkable return from a business that has never made a profit and seen its initial public offering spurned by skeptical investors.
A spokeswoman for Neumann declined to comment.
WeWork parent We Co.’s withdrawn prospectus sketched out ways Neumann has already monetized some of his stake. He sold hundreds of millions of dollars of stock in earlier funding rounds, according to the Wall Street Journal. He also has a $500 million credit line -- secured by WeWork shares -- from UBS Group AG, JPMorgan Chase & Co. and Credit Suisse Group AG. About $380 million was outstanding as of July 31. JPMorgan also loaned him $97.5 million.
That $500 million loan will now be repaid, a person familiar with the matter said. The SoftBank deal extends $500 million of credit to Neumann.
The bank loans helped Neumann, 40, collect assets worthy of a billionaire at a time when most of his net worth was on paper. Over the years he bought about $100 million of properties, including a Manhattan townhouse, a Westchester County farm and an 11-acre California estate. He also owns 10 commercial properties, four of which are leased to WeWork.
WeWork’s value has tumbled, about 2,000 employees are being cut and many investors are nursing losses after the firm’s bailout.
But founder Adam Neumann is still a billionaire.
SoftBank Group Corp.’s proposed rescue package of WeWork involves Neumann selling about $1 billion of stock and getting a $185 million consulting fee from the Japanese firm even as the deal values the struggling office-sharing company at $8 billion, according to people familiar with the transaction. That’s down from an estimated $47 billion at the start of the year. Neumann will leave the company’s board though he still can assign two seats.
On these terms, Neumann’s net worth would be at least $1 billion, according to calculations by the Bloomberg Billionaires Index. While that’s a fraction of what it was on paper in January -- the last time SoftBank made an investment in WeWork -- it’s a remarkable return from a business that has never made a profit and seen its initial public offering spurned by skeptical investors.A spokeswoman for Neumann declined to comment.
WeWork parent We Co.’s withdrawn prospectus sketched out ways Neumann has already monetized some of his stake. He sold hundreds of millions of dollars of stock in earlier funding rounds, according to the Wall Street Journal. He also has a $500 million credit line -- secured by WeWork shares -- from UBS Group AG, JPMorgan Chase & Co. and Credit Suisse Group AG. About $380 million was outstanding as of July 31. JPMorgan also loaned him $97.5 million.
That $500 million loan will now be repaid, a person familiar with the matter said. The SoftBank deal extends $500 million of credit to Neumann.
The bank loans helped Neumann, 40, collect assets worthy of a billionaire at a time when most of his net worth was on paper. Over the years he bought about $100 million of properties, including a Manhattan townhouse, a Westchester County farm and an 11-acre California estate. He also owns 10 commercial properties, four of which are leased to WeWork.
by Tom Metcalf, Bloomberg | Read more:
Image: Adam Neumann
[ed. There's probably a good lesson here for would-be tech billionaires. No need to have a particularly unique product (WeWork); scam the system (Martin Shkreli, Turing Pharmaceuticals); be indicted for fraudulent business practices (Elizabeth Holmes, Theranos); or even have a profitable business model (Travis Kalanick, Uber). All you need is deep market penetration. Just rope in a few big initial investors, hype your product like crazy, focus on creating a successful/lucrative IPO, exit with golden parachute (if or when everything goes to hell).]
