WeWork private equity case study

The deal type, not the legend

WeWork became a shorthand for a growth story that investors struggled to underwrite. The public record is enough for teaching, and it should stay qualitative. A company signed long leases, offered short commitments to customers, and described itself in language that ran ahead of a property business. An attempt to list was withdrawn. Years later the company went through bankruptcy. Those are public facts. They are not an entry multiple, and they are not a return you can borrow for a memo.

No affiliation or endorsement is implied. PE Simulator is not connected to WeWork. The useful part of a WeWork private equity case study is the question a deal team should have forced earlier: what has to be true, per location, for growth to be worth funding.

What a growth story has to prove

A private equity growth plan for this kind of business has to separate filled space from signed space, and price from discounting. If the customer can leave faster than the company can exit the lease, growth adds risk instead of value. If the sales story depends on a technology multiple for a business that pays rent, the screen should say so before anyone builds an LBO. That is deal screening, not hindsight.

Practice the screen in three sentences. What is the mandate fit for a real estate services model. Why would an owner transact. What could be wrong with the earnings, including lease commitments that do not show up as a simple margin. If the third sentence is the whole story, the name does not pass. The Deal Screening Challenge is the free desk for that pass or kill.

• Private equity growth plan
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What to practice instead of a post-mortem

Do not memorize the ending. Build a small case on a simulated multi-site business and write the three moves that would have to be true: fill the space, hold the price, and keep the lease term from outrunning the customer. Put those moves on the growth plan stage of the private equity deal lifecycle. If you cannot staff them, you do not have a plan. You have a story.

When you want numbers, choose them yourself on a tool and label them as yours. This page will not supply a fake EBITDA or a fake IRR. The public outcome is a warning about sequence. Screen the unit, then plan the growth, then talk about value.

A growth story is allowed to be ambitious. It is not allowed to skip the unit. If occupancy, price, and the cost of the space cannot share a paragraph, the private equity growth plan is still a slogan. Practice that paragraph on a simulated multi-site company before you borrow confidence from a famous name.