Embattled Zenefits Cuts Deals With Investors In Effort To Reset Reputation
The move cuts the once-celebrated company's valuation to about $2 billion.
The New York Times:
Zenefits Compensates Investors Over Past Misconduct
Zenefits investors are getting a larger piece of the troubled human resources start-up because they overpaid for their stakes, unaware that the company’s sales teams flouted regulations to enhance growth, Zenefits announced on Thursday. The move will cut the company’s valuation in half, to about $2 billion. The unusual agreement comes after months of turmoil at Zenefits, once a high-flying company that helps small businesses buy insurance. (Benner and Isaac, 6/30)
The Wall Street Journal:
Zenefits Investors Cut Valuation By Half
Embattled health-benefits broker Zenefits on Thursday said it struck a deal with some investors to cut its valuation by more than half to $2 billion, giving them additional shares in exchange for releasing the company of potential legal claims. Zenefits, a once highflying startup that in just two years after its founding was valued at $4.5 billion, has been reeling from regulatory investigations, stalled sales, layoffs and management missteps. On Thursday, Zenefits’s recently installed chief executive, David Sacks, said the company has been trying to work out a deal with investors to move past the problems. (Winkler, 6/30)
Reuters:
Scandal-Hit Zenefits Slashes Own Valuation As It Cuts Deal With Investors
Software startup Zenefits has cut a highly unusual deal with investors to increase their ownership while slashing the once-hot firm's valuation as it seeks to avoid litigation and mend damage in the wake of revelations of cheating. The deal, a concession to investors in the firm's latest funding round, will boost the investors' combined stake to about 25 percent from about 11 percent but cuts the Zenefits' valuation by more than half to $2 billion from $4.5 billion. (Somerville and Todd, 7/1)
