WeWork Ignores Skepticism and Plows Ahead With IPO Plans

This week, the company updated its SEC filings in an attempt to appease investors.

In August, WeWork first announced its plans to go public and the company has been plagued by controversy ever since. Most of the controversy centered around the company’s CEO and its corporate governance structure. 

All of this has significantly impacted WeWork’s valuation and its future as a publicly-traded company. But this week, the company took steps to combat some of this negative sentiment. 

WeWork updated its SEC filings in an attempt to address some of the biggest hangups surrounding the IPO.

Concerns mount about WeWork’s CEO

The biggest issue surrounding the WeWork IPO involve CEO Adam Neumann. Critics have accused the company of giving Neumann too much voting power. And there have been many questions regarding some of Neumann’s previous business dealings.

This prompted the company to amend its SEC filing to change its corporate governance structure. Namely, it reduced Neumann’s voting power from 20 votes per share to 10 votes per share. However, it still left a three-class structure in place that gives Neumann voting majority.

It also changed a provision that would have given Neumann’s wife the authority to choose a successor if he dies or becomes permanently disabled. Instead, the WeWork board will choose a successor. And none of Neumann’s family members will be permitted to sit on the board.

Neumann also received a fair amount of criticism for leasing out several properties he had a stake in back to WeWork, earning him millions of dollars in the process. The filing stated that Neumann will return these profits to the company. Neumann also agreed to sell no more than 10% of his shares within the first three years of the IPO. 

It’s unclear whether these changes will do much to change the sentiment surrounding the IPO. Some have argued that these changes don’t go far enough and are mere “posturing.”  

Will the WeWork IPO go forward?

WeWork’s private valuation is as high as $47 billion but its IPO valuation continues to drop due to waning interest. Recent estimates put it as low as $10 billion.

SoftBank, which is currently WeWork’s biggest investor, recently met with the company to discuss whether the IPO should still go forward. SoftBank initially invested $2 billion with WeWork when it was still considered a $47 billion company. 

But according to CNBC’s David Fauber, the IPO will proceed as planned. And it could happen as early as next week.