The $6 Billion Mistake?

Did Groupon make a colossal error when they turned down Google's $6 billion offer late last year?

Earlier this year, the answer to that question appeared to be a resounding "no". In June, Groupon filed for an IPO, and there were whispers that the company could be worth upwards of $25 billion when they went public. Groupon's management team and board of directors, which had been openly mocked after turning down a concrete $6 billion from Google, were suddenly geniuses once again.

Maybe they were smart to turn down that Google offer after all.

However, things have dramatically changed over the past few months for Groupon, and that $6 billion is suddenly looking pretty good once again.

Earlier this month, Groupon "indefinitely" postponed their IPO, citing recent volatility in the stock market. They also cancelled their pre-IPO roadshow.

The reality is that Groupon's newsflow has turned very negative over the past couple of months.

The SEC is reportedly unhappy about a memo that was leaked in late August in which Groupon's CEO and co-founder, Andrew Mason, lashed out against the company's critics. Many thought that this "internal memo" was intentionally leaked to help ease any concerns about the company. The SEC is reportedly asking questions.

This came on the heels of Groupon amending its S1 filing to strip out ACSOI (Adjusted Consolidated Segment Operating Income), which the SEC also took a dim view of.

There are also rumors abound that Groupon will be forced to raise more money shortly. Groupon raised nearly $1 billion earlier this year, but a substantial chunk of that money went to providing liquidity to earn employees and shareholders.

On top of all of that, Groupon operates in a hyper-competitive space (local deals). In order to keep their edge, Groupon is forced to spend outrageous sums of money on customer acquisition. Facebook and Google are just a few of the major properties are are also eager to make a splash in this space.

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It remains to be seen what will eventually become of Groupon, but the bloom certainly seems to be coming off the rose.

I wonder if Groupon would take Google's $6 billion today?

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