Google is currently worth $30 billion in cash which may mean that spending $5 billion is not such a big deal. However, to spend it for Groupon which would make it the largest acquisition in the company’s history. Despite Groupon’s global popularity and growth, this is still something that is in some point unreasonable. Google can buy other Groupon competitors to accomplish many of the same objectives without spending as much.
There are speculations that Groupon may be in the position to earn somewhere between $400 and $500 million from its top-line revenue or it could be more. Should it earn $500 million, that represents the total value of the deals that it sells. This means its net will probably be about half the top-line number abd a $5 billion price is an estimate of 10 times revenue which is an ultra-super-premium by any standards.
What is it that Google would be buying should it forge on acquiring Groupon? For one, it will get the mentioned revenue stream which might possibly grow internally to over $1 billion in the coming years. It is also seen to get an rising international brand and a channel to sell deals to local businesses and retailers alike among others. There is another possibility for it to get local sales which may amount to something that has yet to be determined while getting massive consumer email list numbering in the millions.
Groupon may project success now but as ‘check-in fatigue’ against Foursquare and others, there are indications that it will be experiencing something like a ‘deal fatigue’. There is the possibility that in the coming year or two, the deals in the market will be different than how it is today. The question stands, would Groupon owned by Google still be able to stay at the center of the changing marketplace? There is the possibility but if it is to have the same ranking that it has today is still doubtful.
