Breather may explore sale or capital raise as flex-office industry struggles

UPDATED, Nov. 6, 11:45 p.m.: Flex-office provider Breather has brought on Moelis & Company, an investment bank specializing in mergers and acquisitions, to consider a possible sale or capital raise, Business Insider reported.

Both companies declined to comment to BI. The flex-office industry has suffered as employees continue to shun physical workspaces in favor of remote working. As a result, revenue has dropped as much as 60 percent across the industry during the worst of the pandemic, Shlomo Silber, chief executive officer of the Bond Collective, told BI.

“We have been approached by probably five different workspace companies already that are looking to either buy or sell or merge,” Silber said.

Breather, which is based on Montreal, laid off 17 percent of its workforce in December 2019. The company’s chief executive officer Bryan Murphy told The Real Deal that the company grew 250 percent in 2019.

Breather has raised $122 million overall, including $45 million in 2019. The company has a presence in 10 major cities, including New York City, San Francisco, and London, and its client list includes Google, Spotify and Airbnb. Its business model focused on offering small spaces — some just a few thousand square feet — for shorter periods of time. That model appeals to smaller tenants, which have struggled during the pandemic.

Other flex-office providers have suffered during the pandemic, although some of their troubles, like Breather’s, were evident before the pandemic closed many offices. At the end of October, Knotel laid off 20 workers, and the company’s chief executive officer, Amol Sarva, said he hoped the firm would achieve profitability by 2021.

CORRECTION: An earlier version of this piece stated that Breather raised $120 million; it has raised $122 million.

[BI] — Georgia Kromrei