

Groupon a Case Study in How Not to Do IPO - mvs
http://finance.yahoo.com/banking-budgeting/article/113445/groupon-case-study-marketwatch?mod=bb-budgeting&sec=topStories&pos=8&asset=&ccode=

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ChuckMcM
On the one hand I agree with the notion 'let the market price out what they
think of Groupon's business' on the other I understand that there is a
responsibility for the SEC to provide a prudent level of transparency to
prevent fraud. If the numbers are accurate, and the costs clearly accounted
for, well its caveat emptor is it not?

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raganwald
There has historically been a certain “quality” of companies publicly listed.
Two things to consider. The first way this matters is that the “brand” of an
exchange is, to a certain extent, harmed by a company of extremely low quality
being listed. So it’s just like a store selling a terrible product. Even if
the fine print says “terrible product,” the store’s business suffers if it
sells terrible products.

The second way this matters is that certain investment vehicles are tied to
investing in companies listed on the public exchanges. These investment rules
rely on the implied quality of IPOs. If you throw that out the window and say
“caveat emptor,” then all of those investment vehicles need to be
restructured, which is going to cause a lot of disruption.

Neither of these reasons might compel the SEC to refuse a listing to an issue
that seems to be of low quality, however they do point to the self-interest of
a large number of people in ensuring that IPOs at least _appear to be_
reasonable businesses. If Groupon appears to be a terrible risk and its IPO
turns into a financial disaster, a large number of people will be adversely
affected even if they didn’t invest in it. To the extent that they have
influence over the process, they will resist, or apply pressure to Groupon to
do a better job of selling itself as the Next Big Thing.

Cynical summary: The industry depends on its issues having a strong appeal.
Regardless of the transparency and fundamentals, it is bad for business to
have an issue that is perceived to be low quality.

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shazam
Looks like someone was right...

[http://online.wsj.com/article/SB1000142405311190453740457655...](http://online.wsj.com/article/SB10001424053111904537404576554812230222934.html?mod=WSJ_hp_LEFTTopStories)

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pbreit
Until there is any demonstrable adverse impact, Groupon remains a case study
in how _TO_ do an IPO.

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georgemcbay
I will bet you $500 USD that Groupon does not IPO in 2011.

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pbreit
That's a wager on the environment. How about a bet that Groupon goes within 3
months of Zynga?

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suivix
I think the companies with failed IPOs are ones nobody has heard of.

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mikeryan
Pets.com, Webvan, Kozmo? All of these are pretty well known.

Heck Hertz and Vonage have had what were considered failed IPOs.

