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Ousted WeWork Founder Adam Neumann Could Get An Extra $250 Million From The Company He Nearly Destroyed

I don’t know how or why he keeps landing these incredible golden parachutes for a person who essentially transformed $50 billion into $8 billion.

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I have three main recommendations if you’re not familiar with the tale of Adam Neumann and WeWork. #1) Read Reeves Wiedeman’s book “Billion Dollar Loser.” #2) View the “WeWork” documentary on Hulu. And thirdly, pre-order “The Cult of We” by Eliot Brown and Maureen Farrell by clicking on this link right away. The book, which will be released July 20, is rumored to be chock-full of new salacious revelations concerning how the Neumanns used WeWork as a means of egregious personal enrichment.

To give you a quick overview of the background necessary to understand today’s growth, Adam co-founded the business WeWork in 2010. The company raised ungodly amounts of venture capital funding, primarily from Japan’s SoftBank, then went on an insane spending spree. A large portion of the money was used to acquire long-term leases on structures that WeWork would later remodel and turn into shared workspaces that would be rented out to short-term customers. Another sizable sum of money was frittered away on extravagant company events, private planes, and odd investments like the $13 million it put into a business that made artificial waves for surfing.

When WeWork considered an IPO in late 2019, it was losing hundreds of millions of dollars. In September 2019, the business released a widely parodied S-1 filing. In September 2019, Adam was forced to quit as CEO of WeWork due to the S-1 and other personal problems, including the disclosure that he smoked marijuana on a business-owned private plane and that he owned a number of the buildings that WeWork was renting back at a profit.

The highest private valuation for WeWork was $47 billion. Following a funding round that ended in the beginning of 2019, it attained that valuation. WeWork’s valuation had fallen to $8 billion shortly after the founder left in late 2019.

WeWork ultimately raised $11 billion in venture financing to build a business that was worth $8 billion.

(Photo by Kelly Sullivan/Getty Images)

Golden Parachute

SoftBank initially agreed to purchase $972 million worth of stock from Adam Neumann in order to free themselves from the previous CEO. Additionally, Adam’s debt that was secured by his shares and was worth about $500 million was refinanced by the bank. The corporation paid him a $185 million “consulting fee,” which is the craziest part of all.

After the Coronavirus severely destroyed WeWork’s chances a few months into 2020, SoftBank declared it was breaking the agreement. It stopped paying his consulting fee and held back on its plan to buy $972 million worth of Adam’s shares.

After a flurry of lawsuits, SoftBank finally consented to buy around half of the $972 million worth of shares it had earlier offered.

Not only that.

In the end, SoftBank consented to provide Adam $106 million in cash. That’s on top of $92 million in consulting fees Adam had already received before the deal went sour, according to SEC filings.

SPAC

Surprisingly, WeWork is poised to make another attempt at going public, this time through a SPAC. That stands for “Special Purpose Acquisition Company” and it’s essentially a backdoor way of going public without the traditional bank-run process.

And somehow Adam Neumann is making money once more.

The Wall Street Journal was the first to announce that Adam received a $245 million “sweetener” from BOWX as part of this SPAC scheme. Specifically, Adam will be given $245 million worth of shares with a cost of zero dollars per share for him to acquire if the acquisition is successful and the stock price maintains above $12 following the WeWork merger. A $245 million gift.

If all goes according to plan, WeWork’s value upon going public will be $9 billion. That’s $1 billion more than it was worth immediately after Adam stepped down and $38 billion below it’s all-time valuation peak of early 2019.