[JacobAldridge]

"Neumann’s ability to negotiate such rich terms was helped by the fact that his shareholdings controlled 10 times the votes of a normal shareholder, and he was able to argue for a higher price to cede control."

Correctly or, more likely, not - it seems the payoff was made in early 2021 at a time when valuations were soaring and there was a renewed push for an IPO. Neumann could have blocked that.

If I'm parsing a quick read of the data correctly, they backdoored an IPO in October 2021 at an $8bn valuation - and shares jumped 13% (so + $1Bn). A snapshot at that time could be used to argue they paid Neumann $x00 million to realise a multi-Billion dollar valuation and $1Bn+ growth in market cap.

Could they have forecast the rapid decline thereafter? Maybe some of those investors didn't care, as long as they got some return? If Neumann had dragged the battle out for another year, into 2022 when the markets went South, it probably would have cost WeWork a lot more on paper than whatever they paid him.

[bhouston]

I was referring to the fiasco of 2019 where WeWork went from $50B to $5B while giving Adam Neumann a $1B payoff - did you miss that, it was on here all the time?

https://www.businessinsider.com/wework-ipo-fiasco-adam-neuma...

The SPAC merger (not IPO) in October 2021 at $9B but then it has continued to slide now down to $250M. That IPO does seem to be trying to get some value out of this turkey by passing it off to public investors.

There was never a viable business here, just hype. Going through its finances that are public, it has never made any money. Its net losses per year are roughly its income in most years. Its valuations were completely speculative.

[JacobAldridge]

Don't get me wrong - I never saw the value! Just answering the question.

Why in 2021 did they give him that payout? Likely because they thought it offered the best ROI moving forward (and for some shareholders, especially anyone who sold at the post-listing peak, it did).

It definitely wasn't recognition for past success.

[ethbr0]

'We paid Neumann too much to exit quickly, because we knew the company prospects were bad and we needed an IPO to exit ASAP' probably isn't a crime, assuming there weren't errors on financial disclosures.

But it's certainly dubious enough to warrant a lawsuit to see if there were false claims made.

[notahacker]

> at a time when valuations were soaring and there was a renewed push for an IPO. Neumann could have blocked that.

"We invested in a company structured so that the CEO could hold us to ransom, and agreed the bad terms because we thought the CEO would have breached his fiduciary duty to other shareholders and blocked advantageous exits if we didn't pay his ransom first" doesn't sound any better...

[ethbr0]

But not illegal, no?

I actually kind of respect Neumann. Not in a moral/ethical way, of course, but in a defend-yourself-at-all-times way.

He never would have gotten that payout if he hadn't legally fortified his position like he did, and then successfully maintained it through SoftBank's initial due diligence.

"Heads, I win. Tails, I win." type stuff.

[itsoktocry]

>A snapshot at that time could be used to argue they paid Neumann $x00 million to realise a multi-Billion dollar valuation and $1Bn+ growth in market cap.

This makes no sense to me.

Why would you pay hundreds of millions of dollars to someone for a paper valuation and market cap? It was all meaningless.

[ethbr0]

Liquidity. It's the difference between initial equity holders being able to sell and not.

[JacobAldridge]

Not meaningless, just temporary in a way they didn’t forecast.

Imagine you could buy a house for $200,000, live in it for a year, and then sell it for $1M. Would you take that deal, even if you didn’t like the seller?