Groupon’s messy road to an IPO is getting a fresh look today in the New York Times, as its star business columnist Andrew Ross Sorkin used it as a spring board to slam its banking backers.
Sorkin details all the red flags in the IPO: The fact that the company’s founders have cashed out. The fact that it used sketchy accounting. The fact that growth is slowing. And so on.
After laying out the problems with Groupon, he arrives at his main point: “How did so many Wall Street firms desperate to underwrite the Groupon I.P.O. miss these warning signs when pitching such a sky-high valuation? Or did they just turn a blind eye?”
Sorkin’s biggest gripe is that Goldman Sachs, and its other investment bankers, were talking about a $30 billion valuation for Groupon initially. That valuation has since fallen down to $10 billion.
The weird thing about Sorkin’s column is that Groupon hasn’t IPO’d yet. Its bankers haven’t sold any shares to anyone at a $30 billion valuation.
What exactly does Sorkin think Goldman was going to do? Walk into Groupon’s offices and say, “Your business is a real dog, and it’s worth 1/3 what the other banks are saying.”
They’d be laughed out of Chicago.
At some point Goldman might have to have some awkward conversations with Groupon CEO Andrew Mason about lowering the valuation.
Yes, some of the stuff that flew through the IPO filing was sketchy. And yes, some of the things Mason did during the quiet period are sketchy.
But, there’s only so much Groupon’s backers can control.
When Groupon hits the public markets, we’ll see what happens. If the bankers are still pushing Groupon out the door at an obnoxious valuation, then he’ll have a better reason for a beef with Goldman over this one.
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