San Francisco: WeWork, seeking to cut costs and unload assets, is in discussions to sell one of its business units for less than a quarter of the price it paid eight months ago, according to people familiar with the talks.
A group of investors and technology executives are negotiating a purchase of the Managed by Q unit from WeWork that would value the software business at less than $55 million, said the people, who asked not to be identified because the negotiations are private. Dan Teran, a founder of Managed by Q who helped sell the business to WeWork this year for a reported $220 million, is part of the group.
A portion of the initial sale in April came in the form of WeWork stock, which has plummeted in value over the last few months. WeWork and Teran declined to comment.
Managed by Q, which makes tools to help companies manage workplace tasks, was part of a spending spree by Adam Neumann, the WeWork co-founder and former chief executive officer, in the hope of diversifying his co-working business. But Neumann stepped down in September under pressure from investors after Wall Street rejected WeWork’s plans for an initial public offering. SoftBank Group Corp. agreed to take majority ownership of WeWork’s parent company, We Co., and helped set a turnaround plan that includes 2,400 job cuts, asset sales and a focus on the original business of renting office space.
Teran spoke about the potential plan to repurchase his start-up at the SALT conference in Abu Dhabi last week. “I’m actively working to buy back my company,” he said. After the sale, Teran said he thought he was done raising capital for Managed by Q. “And here I am six months later doing it again,” he said.
Last week, WeWork completed the first of what it hopes to be a series of asset sales by offloading Conductor. A founder of Conductor, which makes marketing software used by Samsung Electronics Co. and Visa Inc., is a member of the buyer group.
Meanwhile, Neumann may offload some assets of his own. He’s working with a real estate broker to find buyers for his penthouse in New York City’s Gramercy neighbourhood, and he may unwind his investments in six development sites in Silicon Valley, Bloomberg reported.