Following up on yesterday's post, the rumored immanent Groupon acquisition by Google is a mistake for the seller. Notwithstanding the breakneck growth rate, Groupon still has much, much further to grow. The company could easily be a $15 billion business and would be infinitely more valuable to a broader range of buyers once its already strong position in the local market gets stronger.
Consider just one example: the credit card companies. The Holly Grail for them is to dominate local businesses with an array of services including credit, payment processing, marketing, cash management, etc. There would be no better Trojan Horse into small businesses than by owning Groupon. By waiting just 18 months, the bidding war that would be unleashed between Citi, Chase, and Amex alone would double the $6 billion price that's being considered now. By thinking of the company strictly as a web play, however, Groupon is selling itself short and selling itself too soon.
I'm sure Groupon management is getting plenty of pressure from their investors. NEA alone stands to walk away with an estimated $2 billion in cash proceeds. Even by Internet standards that's a big payday. But if they're smart, they'll choose the path of Amazon, EBay, Google itself, and others who, at various critical junctures, chose to re-bet the company and keep going. Instead of walking away, my hope is that the investors recognize they don't just have another really nice web business on their hands, but something that can stand on its own in the global marketplace. If they play their cards right, they'll own a piece of a one-of-a-kind asset. So Andrew, say "no" to the deal and "yes" to the future.