Groupon I.P.O. Said to Value the Company at $15 Billion
Updated — Groupon, the social buying site that spurned a $6 billion offer from Google, is pushing ahead with plans for its initial public offering, a debut that could value the company at $15 billion or more.
Context & Ripple Effects
Groupon's reported $15 billion-plus IPO target marks a sharp escalation from its reported $3 billion private-market valuation in November 2010. It follows new investor interest and IPO preparations in December, after Groupon rejected Google's confirmed $6 billion acquisition offer.
First-order effects
- Groupon is pursuing public-market financing rather than a sale to Google, giving its investors a potential liquidity route while leaving the reported valuation unconfirmed.
- The $15 billion target becomes the benchmark against which IPO investors will judge Groupon's growth and the value of remaining independent.
Second-order effects
- Google loses the clearest acquisition path to Groupon and must treat the company as an independent player rather than a prospective addition to its business.
- A successful IPO at the reported range would strengthen private investors' leverage to seek public-market exits instead of accepting strategic acquisition offers.
Third-order effects
- If Groupon's path holds, fast-growing consumer-web companies will have greater incentive to use private funding and IPO preparations to raise their negotiating power against large would-be acquirers.
The trend: Groupon is part of a shift in which high-growth internet companies use capital markets to preserve independence rather than sell early to larger technology firms.