April 15, 2011

Is Groupon Worth $15-$20 Billion?

John Neumann for Redorbit.com

Groupon, the popular coupon site for local deals and bargains, is poised to pick Goldman Sachs and Morgan Stanley to lead a second-half initial public offering that could value the fast-growing site to at $15 billion to $20 billion.

Chief Executive Andrew Mason told Reuters in January it was talking to bankers about an IPO.

Groupon, which turned down a $6 billion buyout offer from Google in December, is expected to raise as much as $1 billion in an IPO, as soon as the second half of 2011, although the exact number had not yet been determined.

The possible market value, first reported by the Wall Street Journal, also said that JPMorgan Chase & Co. was expected to share the IPO management.

The multi-billion dollar valuation raises concerns about how these quickly-growing companies are able to justify such valuations. Groupon said it has been profitable since June 2009, but does not disclose detailed financial information.

Led by its 29-year-old founder Andrew Mason, known for a quirky personality, has helped shaped the site into a very personal vision as many of his fellow, young, high-profile tech entrepreneurs have done with the likes of Facebook and Twitter.

After rejecting Google's offer, Groupon has been aiming towards a high-profile public offering. It was late December when the company hired its first CFO, Jason Child, a former vice president of finance for the international business arm of Amazon. Mr. Child spent nearly 12 years at the giant online retailer, and served in a variety of financial roles.

The daily discount site has, in less than three years, gone from a back room start-up to one of the country's fastest-growing online companies. Groupon cites more than 50 million users worldwide with annual revenue of more than $1 billion. A staff of 3,100, has grown so fast that the Chicago-based company, has relocated its meetings to a nearby church.


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