The (Overdue) $40B Collapse Of Wework – Capital Raises – Investment banking

In this video, I’m going to explain how WeWork made a 40 billion mistake. And if you’re looking to raise money to acquire real estate or even acquire businesses, you may want to follow this video all the way into the end. You can apply it to your own situation. Even if you may.

The first reason why we were crashed and they had to file for bankruptcy is because of the timing. Because their business model essentially depends on them leasing out office spaces and leasing them out to customers and collecting the difference between the two. Simple arbitrage. So the only thing is that they did this at scale and they did this out of the very high end locations.

Some locations obviously better than others. So in doing this business model and in executing this business model, we’ve seen the highest interest rate increase in 27 years. So the landlords. increase the rent so they can pay for their interest payments because if you own a piece of property, it’s likely that you’ve got debt to acquire that piece of property.

These are the landlords that we work works with because the rents jumped up quickly. Two things have to happen for WeWork to survive. It’s either to increase the rents that WeWork charges for their services, which will make it so that they have to charge their customers more. Or, they would have to go bankrupt or, you know, go into red and not be profitable.

So, it’s hard to win in that case. Secondly, we had a pandemic, which disincentivized everybody from renting out office spaces. And raw office spaces were the single most distressed type of business in the whole of the pandemic because people saw the opportunity to work from home. So with these two reasons, the timing was a nail in the coffin for WeWork, unfortunately, although the economy is somewhat getting back.

The second reason why WeWork crashed is because of the management. So, I mean, obviously I have nothing but good things to say about somebody who took their company to the level of… $40 billion plus in valuation. But other people were reporting that. I mean, management spent around 80, almost 80 or $7 million in trademarking the word we when they rebranded from WeWork to the We Company.

So in doing this, you know, you lose a lot of money and because they’re a public company, they’ll get more, there’s more accountability and with more as Navajo naval ants, you know, famed entrepreneur used to say. With more leverage and massive upside comes more accountability. So yeah, in short, you know, he’s been scrutinized for expanding too quick and signing up too many leases.

And so when they sign up too many leases, they can’t afford, then it becomes really detrimental and it becomes hard. And, you know, so just to recap, the first reason is mainly the timing. The second reason is the management. The final reason is the over dependence on one business model and all the, I guess all the value of.

What was going on had to do with depending on landlords and depending on interest rates really and what the landlords will charge them So in depending on them and not transitioning to you know Using their software for the clients that they serve They weren’t able to quickly transition fast enough to support a business model that didn’t depend on landlords and on interest rates so if somebody’s in the position where No matter how big they are, they over depend on one source of revenue at a scale that they were at.

You know, although, yeah, the scale, the people that are, that are their landlords are many, the business model is the same and they weren’t able to adjust and adapt quick enough by depending on other business models when the time needed them to. So that’s pretty much it. So in short, it’s really just about the management.

It’s about the timing and it’s about being flexible because it’s not only the strongest and the biggest that survive It’s the most adaptable to their environments. So with this if you’re somebody who’s looking to buy Real estate and lease it out or looking to acquire a business and you know, lease it out you know, just learn from the lessons of WeWork and No matter how big it is Always stay humble and remember that you have to adapt to your changing environments So, if you need help in raising capital and setting up a syndication or a fund to acquire real estate in this environment, make sure you head to Raises. com to learn more.

The (Overdue) $40B Collapse Of Wework – Capital Raises – Investment banking

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