WeWork is cutting costs in a bid to save its business and restore investor confidence.
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Topline: As it begins life under new leadership following the departure of embattled cofounder Adam Neumann, WeWork is looking to divest some assets and sell off parts of its business in a bid to better prepare for another attempt at an initial public offering.
- To replace Neumann, WeWork announced two new CEOs, Artie Minson and Sebastian Gunningham, who have been quick to aggressively cut costs and raise cash. The move comes none too soon, as the company looks to restore investor confidence and save its IPO.
- The real estate and workspace firm will sell three companies—all of which were acquired within the last two years, The Information first reported on Wednesday. The three segments of its business being put up for sale are: office management company Managed by Q, networking service Meetup and marketing firm Conductor.
- WeWork is also selling the private plane used by Adam Neumann, a luxurious Gulfstream G650 that the company bought for $60 million last year, according to Business Insider. The luxurious private jet quickly became a symbol of WeWork’s corporate governance issues, raising a red flag for many investors—and hurting staff morale before the company’s planned IPO, sources told Business Insider.
- A group of executives from WeWork’s parent company, We, have also met with bankers in recent days to discuss further ways to cut costs—including laying off as many as 5,000 employees, or a third of its workforce, according to The Information. Other options reportedly included shutting side business related to education or housing, as well as slowing WeWork’s expansion plans.
- The changes discussed may lead to WeWork selling off some real estate and withdrawing from office-leasing markets that are hurting its business, such as in China. Other properties and businesses that may be cut include a gym called Rise by We, a computer programming school called Flatiron and a private elementary school in New York, as well as various residential apartments in both New York and Washington, D.C.
- WeWork declined to provide a comment for this article.
Key background: The man who oversaw WeWork’s meteoric rise, Adam Neumann, was ousted as CEO on Tuesday amid growing investor concern over the company’s business model and irregular corporate governance ahead of its planned IPO. WeWork had delayed its debut as a public company last week, after reducing its estimated market valuation to as low as $10 billion, down from $47 billion in January. A rift over Neumann’s erratic leadership style had developed between Neumann and Softbank’s chairman, Masayoshi Son, who reportedly led the charge to remove the divisive CEO. Softbank is WeWork’s biggest shareholder, pouring over $10 billion into the company.