Jamie Dimon says companies heading toward initial public offerings should first study WeWork’s startling fall from grace.
“I think there are lessons to be learned about these valuations, how you go public, how you treat the public shareholder — and those lessons should be learned by everyone who wants to go public,” Dimon, the CEO of JPMorgan Chase & Co., said in an interview Tuesday on CNBC. “I’ve learned a few myself.”
WeWork went from being one of the most-anticipated IPOs of the year to being a cash-strapped firm forced to accept a rescue package at a fraction of its previous valuation. The company had been valued as recently as January at $47 billion after an investment from SoftBank Group Corp., but last month turned to the Japanese conglomerate for a bailout that placed its worth at less than $8 billion.
JPMorgan had a lead role advising the office-sharing startup on its IPO. After those plans were shelved in September, the bank offered WeWork a $5 billion debt package that the company passed up in favor of the SoftBank rescue. Dimon said he never believed WeWork was worth $47 billion.
“Just because a valuation prints at a certain level by one investor doesn’t mean it’s the right valuation,” Dimon said. “That’s not price discovery. Price discovery is when a lot of smart people around the world knowing all the facts can kind of buy and sell all the time.”
He said private companies should also take more time to shore up corporate governance and disclosures before proceeding with an IPO. Investors raised concern about WeWork’s corporate governance after it filed its S-1, the registration filing required by the Securities and Exchange Commission ahead of going public.
“I think companies going public should have proper corporate governance before they file an S-1,” Dimon said. “You should have your independent board members before an S-1. You have to make sure you take a lot of time to go through how you disclose this stuff. Shareholders should be treated like partners.”