Easterbrook on Groupon

We just loved the following comment from Gregg Easterbrook's Tuesday Morning Quarterback column today (I hope Mr. Easterbrook doesn't mind the reprint):

Groupon Issues Coupons for Its Own IPO: Groupon just had a successful IPO, raising $805 million. Eleven months ago, the same company turned down a $6 billion purchase by Google. Had Groupon accepted the Google proposal, its early investors and founding management would have $6 billion; instead, following the IPO they are holding a much smaller sum. True, they also still hold equity, and could wind up ahead in the long run. Or they may end up way behind: Your columnist noted 11 months ago that Groupon someday may wish it had accepted the Google offer. At any rate, rather than getting $6 billion in 2011, Groupon insiders got $805 million. Groupon issued discount coupons for itself, offering 87 percent off!

Mr. Easterbrook is correct to point out that there is a chance that those involved will more than make up for not accepting Google's billions at some point. However considering typical early investor expectations for exit, the time value of money, and signals to the contrary being provided by the supply/demand for shares, it seems about as likely as law school hire rates being uninflated.

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