Groupon, Chicago’s daily deal web sensation, is said to be getting closer to becoming a public company in a stock offering that could value it at $15 billion to $25 billion, according to a report.
Two unnamed sources quoted by Bloomberg BusinessWeek say the IPO could come this year.
Estimates from late last year had pegged Groupon’s valuation at $6 billion to $15 billion.
Groupon declined comment on the speculation.
Groupon is among several web-based companies that have seized leading positions in the new kinds of businesses they have created: Groupon, with daily deals targeting specific geographic regions and helping local merchants; Zynga, by creating social-media games such as FarmVille and CityVille, which make money from sales of virtual goods, and Facebook, which created a new way for friends and family to communicate.
Zynga is said to be valued at $10 billion, and Facebook at $75 billion.
Analyst Sandy Smith said these companies command premium valuations because they have the largest market share in businesses that break new ground.
These companies compete fiercely to attract and keep the best employees and managers as they grow, said Smith, a deal attorney at Womble Carlyle in Atlanta.
People who are hired at these highly valued companies get company stock at the price it was valued when they started work. That means the first and earliest employees will see the value of their stock skyrocket if the company’s public share offerings are as rich as estimates indicate. Employees hired after the share price is already high will benefit less.
“These companies will make lots and lots of millionaires,” Smith said.
As for investors, experts warn that they should ensure that companies they are considering investing in have an attractive and growing market, a leading share of the market, an experienced management team and that the companies are growing and profitable.