WeWork employee equity could be worth nothing in an IPO or bankruptcy - Business Insider

, the IPO research firm Renaissance Capital projected that if WeWork went public at a market cap of less than $14.5 billion after an IPO, that could result in the world's largest IPO ratchet. Softbank shareholders would be issued more than $400 million worth of additional shares.In the event of bankruptcy and liquidation , employee equity gets paid last.

Augusiak-Boro added, "If the asset sales are successful — meaning unproductive assets are converted into cash for either delivering the balance sheet or funding growth of WeWork — the equity value may increase."The real problem with preferred shares, according to Robinson, is that "these deals are not always communicated perfectly" to everyone in the company — namely, employees.

When employees hear that the business is now worth half of its previous valuation, for example, they might be "distraught," Robinson said, because they assume that the value of their equity is cut in half, too. What employees might not know is that all of the money the company raised goes back to preferred investors — potentially leaving employees with nothing. "That fuels a notion of, 'I got screwed,'" Robinson said.

Source: News Formal (newsformal.com)

United States Latest News, United States Headlines

Similar News:You can also read news stories similar to this one that we have collected from other news sources.

Uber, WeWork investor Benchmark has a reputation for ousting founders - Business InsiderBenchmark's reputation as 'founder friendly' is under scrutiny after the VC firm helped remove WeWork's cofounder Adam Neumann.
Source: BusinessInsider - 🏆 729. / 51 Read more »

WeWork Founder Adam Neumann’s Trove of Pricey PropertiesIn good times, the entrepreneur borrowed hundreds of millions, snapped up at least six homes, and was eyeing more. Then last month happened. Did he turn them into WeWorks? 😍😍😍 We work is a scam.
Source: WSJ - 🏆 98. / 63 Read more »

WeWork India seeks new backers after talks with local bank collapseWeWork's India franchise has seen talks with existing backer ICICI Bank on ... Get out now.
Source: Reuters - 🏆 2. / 97 Read more »

Will There Be Drop-off Drama for Rent the Runway and WeWork?The partners have both experienced issues with their separate businesses in recent weeks.
Source: wwd - 🏆 24. / 68 Read more »

WeWork to close its WeGrow elementary school in New York next yearWeWork said on Friday it will shut down its WeGrow private school in New York Ci... WeCrumble. I worked in a building in Manhattan, one that housed one of the first WeWorks. They were buying multiple floors in this building, kicking out long time tenants. I will never forget what super said to me. “This is a scam. No one ever can buy up/ lease this much real estate in Brewing.
Source: Reuters - 🏆 2. / 97 Read more »

Netflix, WeWork and others bolster L.A.'s office marketEntertainment, technology and co-working companies kept Los Angeles office landlords happy in the third quarter. Your city is burning up, and this is what you report on? LAwind
Source: latimes - 🏆 11. / 82 Read more »