Michael Newman’s latest ‘e-Wealth Daily’ article is titled “Would You Reject a $6.0-Billion Offer?”. [Michael Newman’s Article]


Michael Newman’s latest ‘e-Wealth Daily’ article:

Would You Reject a $6.0-Billion Offer?

As a business owner, there is something you always need to be aware of: the value of your business and, more importantly, how the value of your business stands to change. It’s essential
to know this because, at some point, you may receive an offer for your business from the competition or a larger company looking to expand into your market, and you’ll want to know if
you should take it.

I’m writing about this because, on Monday, it was announced that Groupon, an Internet coupon sales company, had rejected a $6.0-billion offer from Google. As we all know, Google is an
important company with lots of money and influence. It’s estimated that Groupon was pulling in about $2.0 billion annually, and it is still growing.

As you can see, Google offered more for the company than it was currently worth, and likely made an offer it felt was fair. Groupon, however, disagreed. Was it the right decision to reject to the offer?

A few years ago, one of Google’s competitors, Yahoo!, made a bid for Facebook. This was before Facebook reached the popularity it currently has. The offer was $1.0 billion. At the time, it may have sounded like a good offer for a business that was just getting off the ground. But Facebook rejected it, grew rapidly, and is now estimated to be worth in the neighborhood of $44.0 billion.

As you can see, Facebook understood that it was still growing and had all kinds of potential — mainly because it had no competition. And, really, it still doesn’t. Facebook is clearly the
leader and innovator of social networking, and likely will be for quite some time.

Groupon, on the other hand, doesn’t enjoy the same exclusivity. Recently, all kinds of competition has popped up that is likely taking away some of its market share. What’s more important is
that Google, which clearly wants into this market, has all kinds of choice when it comes to buying another business. When they go to one of Groupon’s competitors, likely with a smaller offer and it’s accepted, Google will be able to pump all kinds of money into its acquisition and likely take over Groupon’s current lead in the market.

By failing to recognize its place in the market and the true power of Google, it’s quite likely that Groupon has overvalued itself. It appears as though they should’ve taken the offer, because Google has too many other options and too much influence. Of course, we’ll see how this all plays out, but at first glance it seems like Groupon has made the wrong decision!

e-Wealth Daily

About e-Wealth Daily

The e-Wealth Daily Bulletin brings you daily tips, advice and breaking news related to home businesses, small businesses and internet marketing. Our team of experts gives you the information you need to take your business pursuits to the most profitable level. Founded by Adrian Newman in 2003, the e-Wealth Daily Bulletin and www.ewealthdaily.com are a division of Lombardi Publishing with online newsletters reaching over 100,000 subscribers each month.

* IMNewsWatch would like to thank e-Wealth Daily for granting permission to reprint this article.

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