Groupon to Pick Goldman, Morgan Stanley to Lead IPO
Groupon Inc. is expected to pick Goldman Sachs Group Inc. and Morgan Stanley as its two lead underwriters for a planned public offering later this year, people familiar with the matter said. — The IPO is expected to value the Chicago company …
Context & Ripple Effects
Groupon enters bank-selection season with its momentum story under visible strain: analyst-published estimates showed U.S. revenue falling 30% in February and another 32% in March, even as the company ran a billboard campaign to hire more than 100 developers for its Palo Alto office and rumors circulated that President and COO Rob Solomon was stepping down.
Naming Goldman Sachs and Morgan Stanley as co-lead underwriters — still unconfirmed, per people familiar with the matter — would put two of the street's most active technology-IPO shops on what is shaping up as one of 2011's largest consumer-web offerings, with the filing expected later this year.
First-order effects
- Goldman Sachs and Morgan Stanley would secure lead roles on a marquee mandate, splitting fees and bookrunner prestige on an offering expected to value the Chicago company highly.
- Groupon gains the banking relationships needed to hit a later-this-year listing timetable, locking in advisors before its confirmed U.S. revenue declines force harder valuation conversations.
Second-order effects
- A public filing would subject Groupon's financials to audited disclosure for the first time, testing how closely the analyst-published monthly estimates that flagged the spring slowdown track the company's own books.
- Rival deal platforms face pressure to line up their own underwriters and timelines, since a Groupon listing would set the first public market benchmark for the daily-deals category.
Third-order effects
- If Groupon lists while its core U.S. business is decelerating, the deal becomes a test case for whether 2011's consumer-web IPO window prices growth trajectories or brand scale — and whether outside analysts publishing private-company estimates can move valuations before a filing ever lands.
- A successful dual-bank lead structure on a category-defining offering would reinforce the concentration of tech IPO mandates among a small set of bulge-bracket firms.
The trend: Consumer-web companies are racing to the 2011 IPO window on the strength of scale rather than current growth, with outside analysts increasingly shaping the valuation narrative before filings begin.