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WeWork’s Collapse After IPO: A Warning Against Mergers with SPACs

Following the merger of the shared office operating company ‘WeWork’ and the Special Purpose Acquisition Company (SPAC), they went public. However, immediately after this public offering, a symbolic event occurred where a new major company was added to the list of bankrupt companies. Let’s take a closer look at the details.

WeWork, an American company that operates a shared office business, is worth noting. Its business model, which offers shared and rental office spaces, caters to a variety of business needs, such as startups and freelancers.

However, WeWork was on the verge of bankruptcy shortly after its merger with the SPAC. This happening right after its IPO was a surprising turn of events. A SPAC is a company established to acquire specific businesses; since it is itself publicly offered as a security, it allows for faster and easier fundraising than a typical IPO.

However, as in this case, if a company’s business foundation is unstable, the risk of bankruptcy increases immediately after the IPO following the merger with the SPAC. Therefore, investors need to thoroughly verify the actual status and profitability of the business before considering investing through a SPAC.

Moving forward, companies contemplating a merger with a SPAC or going public are expected to take a more cautious stance, learning from this WeWork case. Also, investors are required to grasp the company’s management situation and business model and appropriately evaluate the risks.


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