Re:WeWork lays off 2,400 employees
by lotsofpulp on Thursday November 21, 2019 @01:57PM
(#21597949)
Unless Neumann presented fraudulent numbers, then the buyer is responsible for valuing what they buy.
Sellers don't get to dictate what something is worth.
I'm not arguing that Neumann's actions meet the legal definition of fraud. I'm arguing that he has a moral responsibility. Investors are responsible for believing Neumann. But I think that if he had been an ethical person who did not self-deal, WeWork might not have been over valued so much. I think self-dealing and dishonestly representing your company's worth is related.
Re:WeWork lays off 2,400 employees
by lotsofpulp on Thursday November 21, 2019 @02:27PM
(#21598374)
The self dealing was not hidden, so I am perplexed why one would think a company with self dealing is worth more than a company without self dealing.
Neumann, as a seller, went out into the market and found some buyers. A seller sells for the most they can, and the buyer buys for the least they can. Except in this case, the buyer wanted to flip it, so the buyer wanted to over value it, so that they could claim it was worth even more (due to the rate of increase in "valuations") when they try to IPO it.
If anyone was lacking in morals, it would be the buyer who intentionally paid more than they knew they would if their aim was to hold onto it as a business, just so they could pawn it off onto someone else who didn't know better.
Materially WeWork is a real estate company selling itself as a tech company to get a higher valuation. Sure, it's expected that founders don't have a realistic idea of what their company is worth, investors should have done more research. But Neumann's ethical failings in regards to self-dealing is closely related to failing to accurately represent the state of his business. I think Neumann is fully responsible for WeWork's overvaluation, even if he fully believed his own spin.