Both of its lead financial advisers — JPMorgan Chase & Co. and Goldman Sachs Group Inc. — have concerns about proceeding with an IPO that could value the company as low as $15 billion, the people said, asking not to be identified because the talks are confidential. That’s set off a push to make the public sale more palatable to potential investors with governance reforms.
It’s unclear what changes WeWork may make to its governance to improve interest in its IPO. The company already has taken some steps, such as adding a woman to its board and having Neumann return $5.9 million of partnership interests initially granted to him as compensation for trademarks used in a rebranding. Yet its prospectus last month raised a variety of other concerns. Among them: The company paid Neumann rent and lent him money. There’s also his voting rights over major decisions.
The company had planned to hold a formal roadshow to promote the offering as soon as this week, Bloomberg reported last week. But scrutiny of the firm’s finances and governance, as well as broader market turmoil, have taken a toll on investor enthusiasm. Early this year, Goldman Sachs privately suggested to people close to WeWork that its valuation could rise to $65 billion after going public. Advisers estimate it may achieve less than a third of that under current conditions.