• Despite postponing its initial public offering last week and replacing CEO Adam Neumann on Tuesday, WeWork could still complete an IPO this year, business experts say.
  • The biggest obstacle is thought to be valuation — how much investors are willing to pay for the company's shares and how much its existing shareholders are willing to accept.
  • After indicating last week that it intended to press forward with its IPO in the near future, WeWork on Tuesday indicated it might be reconsidering that plan.
  • Many of the experts think the company will wait to give its new management team time to prove itself.
  • Read all of Business Insider's WeWork coverage here.

WeWork put to rest a nagging subject of speculation Tuesday with the announcement that Adam Neumann, the controversial founder, would step down as CEO. But the office-sharing company left another critical question unanswered: the timing of its planned initial public offering.

Even after everything it's been through lately, WeWork could still go public this year. At least in terms of the bureaucratic barriers needed to hold an IPO, there's not much standing in the company's way, financial and business experts told Business Insider.

Still, WeWork will have to navigate a treacherous calendar if it hopes to pull off an offering this year. And even with the company unburdened of Neumann's reputational baggage, its biggest challenge remains the one it's had to contend with since making its offering paperwork public in August: investor demand.

"It's all a question about the valuation," said Jay Ritter, a finance professor at the University of Florida who closely studies the IPO market, saying WeWork would be able to find buyers for its IPO if it's willing to set the price low enough.

Of course, the price public investors are willing to pay for the company's shares may be far too little for SoftBank and WeWork's other private investors to swallow. Until there's a consensus on that, an IPO will be incredibly tricky in the near term.

"Ultimately, I think that there's a price that this gets done at, in most cases, but is it a valuation that the current investors are willing to take?" said Steve Skolnick, an attorney with Lowenstein Sandler who's helped guide numerous companies through public offerings. "SoftBank is never going get their money back or their value back, at least not initially."

It's an open question where WeWork's IPO goes from here

What comes next for WeWork's IPO has been an open question since the company postponed it last week in the face of resistance from Wall Street. At the time, the company said it still planned to complete the offering this year, but even then some investors and analysts were skeptical it would be able to pull it off.

And that plan may have been further thrown off track by Tuesday's big management shake-up. The company announced it's replacing Neumann with two insiders who would share the CEO title — Artie Minson and Sebastian Gunningham, WeWork's former chief financial and chief revenue officers. While Neumann will remain as WeWork's nonexecutive chairman, he will no longer have majority control over the company, because it is reducing his votes, and his wife is relinquishing her roles at the commercial real-estate giant.

Part of the pushback WeWork has faced from would-be investors in its IPO focused on Neumann. A series of deals he was involved in with the company, including selling it the rights to use the name "We," raised eyebrows. So too did a Wall Street Journal article last week that reported he had transported and smoked marijuana on a plane to Israel and frequently served copious amounts of tequila at executive retreats.

A statement released by the WeWork's co-CEOs on Tuesday indicated that the company might be backing away from its plan to go public this year, saying they were "evaluating the optimal timing" for that to take place. The company has a big incentive to try to make the deal happen this year — its banks have agreed to loan it $6 billion if it raises $3 billion in an IPO by the end of the year.

WeWork faces a challenging calendar if it wants to list shares in 2019. The next few weeks will bring the Jewish high holidays, a period when bankers and companies usually refrain from engaging in the IPO process. And the period after Thanksgiving is often considered a no-go for IPOs, with the winter holidays beginning and institutional investors, looking to lock in returns, hesitant to make bets on risky IPOs as the year comes to a close.

That leaves a very small window of time if WeWork wants to press ahead with an IPO in 2019.

If it does decide to go for it, WeWork faces little in the way of bureaucratic obstacles, business experts said. It was primed to start its road show — the series of meetings companies hold with prospective investors immediately before selling shares in an offering — last week. To get the process back on track, it would basically just need to file some updated paperwork with the Securities and Exchange Commission that reflect the recent management and governance changes, they said.

"It can start the road show as soon as it wants," Ritter said. "It's not as if they're totally unprepared."

Investors have been skeptical of WeWork

The much bigger barrier WeWork will have to confront if it wants to go forward with its IPO is with investor skepticism. The pushback the company faced encompassed much more than just Neumann's control and conduct. Investors and analysts were also skeptical of WeWork's business model, its ability to survive a recession, and its valuation.

Read this: Here's how WeWork answered the 5 biggest questions about its business — and why analysts are still worried about its coming IPO

The latest changes have most likely raised fresh concerns with investors. Wall Street generally doesn't like uncertainty. By removing Neumann and replacing him with two relatively unknown executives, WeWork has essentially added an uncertainty to its business, said Robert Siegel, a lecturer in management at Stanford Graduate School of Business.

"There's no track record of these two people running this company," Siegel said. "I think it's going to be difficult for Wall Street to get comfortable with it in the next 90 days."

A deal probably could be done at the right price, the experts said. What that price will be and whether WeWork's existing investors would accept it are huge questions.

SoftBank valued WeWork at $47 billion in a funding round in January. But the company repeatedly indicated that it would be willing to accept a much lower market capitalization in its public offering, according to numerous reports. Immediately before pulling its IPO, it reportedly considered going out with a valuation of as little as $10 billion.

$10 billion may be the new ceiling for WeWork's worth

If it tried to go forward with its offering, that valuation may now be the ceiling of its worth in discussions with prospective investors, said David Erickson, a senior fellow in finance at the University of Pennsylvania's Wharton School of business. The changes WeWork made almost certainly haven't raised its valuation, at least not in the near term, he said.

"I don't think valuation's going up" from where it was in WeWork's most recent conversations with investors, he said. "It's probably going either at that level or down."

SoftBank has already been said to have resisted having WeWork debut with a valuation of $15 billion to $20 billion, for fear of having to recognize steep losses on its investments in the company. It may well put up even more of a fight if the valuation drops even further.

That's why several of the experts said they didn't expect the company to go out this year. It most likely will want to take the time to get Wall Street comfortable with its new management team and give the new CEOs some time to address the concerns about its business model and sustainability, they said.

"Given all they've gone through, I would think you would want to have a little bit of space to kind of address some of these issues," Erickson said.

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