After trying blockchain, Adam Neumann wants to buy WeWork back

After being ousted from WeWork half a decade ago, co-founder Adam Neumann is seeking to reacquire the company through his new venture, Flow Global.

Neumann’s legal team has sent a letter to WeWork’s advisors, signalling his interest in either purchasing the company back or providing it with debt financing. Despite his persistent attempts over several months to engage with the company for negotiations, the reported response from the company’s advisors has been limited, with a noted “lack of engagement”.

Neumann’s departure from WeWork in 2019 followed a failed attempt to take the company public, leading to his exit with a significant package, including US$245 million ($375.3 million) in company stock and US$200 million ($306 million) in cash.

Following his departure, Neumann launched a fresh startup Flowcarbon. And because is was 2022, it naturally involved selling tokenised carbon credits on the blockchain.

Meanwhile, WeWork was facing significant financial difficulties. Back in November, it filed for Chapter 11 bankruptcy in the US amid declining demand for office space and rising interest rates. At the time the company was shouldering over US$4 billion ($6.1 billion) in debt.

In the aftermath of leaving the startup, Neumann also founded Flow Global, a company focused on the residential real estate market, which received a US$350 million investment from Andreessen Horowitz in 2022. His efforts to regain control of WeWork were reportedly supported by Dan Loeb’s Third Point.

But According to the Financial Times, Third Point has “only preliminary conversations with Flow [Neumann’s property company] and Adam Neumann about their ideas for WeWork, and has not made a commitment to participate in any transaction”.

The publication is also reporting that executives from Third Point and Japanese company SoftBank haven’t had a meeting with Neumann about the future of WeWork since October 2023. To date, Softbank has injected over US$16 billion ($24.5 billion) into the business.

Neumann’s proposal for WeWork aims to capitalise on the trend towards hybrid work environments, suggesting a vision to enhance WeWork’s value and performance under his leadership. WeWork has stated that it routinely reviews expressions of interest from external parties, focusing on strategic restructuring efforts to ensure its financial sustainability and independence.

“In a hybrid work world where demand for WeWork’s product should be greater than ever, my clients believe that the synergies and management expertise offered by an acquisition by my clients could significantly exceed the value of the debtor’s on a standalone basis,” Neumann’s lawyer, Alex Spiro, wrote in a letter to WeWork earlier this week.

Regardless of the next move, it’s likely to be an uphill battle for Neumann. The company’s failure to IPO under his former stewardship is a black mark against him. He will also have to go up against WeWork’s senior creditors, who would gain control if the company manages to survive bankruptcy.

Meanwhile, WeWork hasn’t gone into detail regarding Neumann’s interest in taking back control.

A WeWork spokesperson said in a statement that it receives “expressions of interest from external parties on a regular basis”.

“We continue to believe that the work we are currently doing — addressing our unsustainable rent expenses and restructuring our business — will ensure WeWork is best positioned as an independent, valuable, financially strong and sustainable company long into the future,” they added.

The future of WeWork in Australia is unclear

Adding to the complexity of WeWork’s global challenges, the company has faced significant setbacks in Australia. Back in October, ahead of the bankruptcy filing, WeWork closed three of its Australian locations — two in Sydney and one in Brisbane.

According to a WeWork spokesperson at the time, this decision was driven by a desire to “achieve a sustainable capital structure and profitable business to serve our members for the long term”. WeWork’s 15 remaining Australian locations across Sydney, Brisbane, Melbourne, and Perth remain operational at the present time.

This backdrop of financial and operational turmoil in both the US and Australia underscores the significant challenges facing WeWork. As Neumann attempts to navigate a volatile path back to leading the company, WeWork continues to grapple with the effects of high operating costs, long-term leases, and the shift towards remote work, all amid an increasingly competitive co-working sector and macroeconomic volatility.

It’s currently unclear exactly how these moves by Neumann may affect the Australian arm of WeWork. WeWork declined to respond beyond its public statement.