Groupon Clones Struggle to Compete, but Are Ripe for Acquiring

While daily deal clones may not have a chance competing against the giants in the space, they still have a good chance of being sold.

A study by the 451 Group’s M&A KnowledgeBase found that so far this year, mergers and acquisitions in the daily deal and coupon space are up 700 percent year over year to 35 from only five in the same period in 2010.

The acquisition of Ticket Monster in South Korea by LivingSocial last night actually represents the 36th transaction; the 35th transaction was conducted earlier this week when Google purchased The DealMap.

Other findings:

  • Of the daily deal sites sold so far in 2011, 96 percent were founded less than two years ago; 63 percent of them were founded in 2010.
  • Expanding into new markets, both domestically and internationally, is the most common reason for making an acquisition.
  • Roughly half of the activity occurred in the Americas, while the other half was distributed throughout the Asia-Pacific and European regions.
  • Groupon is by far the most active acquirer, responsible for 20 percent of transactions. The company has purchased nine competitors in Australia, Indonesia, Singapore, India, Japan, South Africa, Israel, Russia and Chile.
  • Only about 10 percent of the transactions have disclosed values but even with that, acquirers have spent $43m on daily deal properties.

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I think the NSA has a job to do and we need the NSA. But as (physicist) Robert Oppenheimer said, “When you see something that is technically sweet, you go ahead and do it and argue about what to do about it only after you’ve had your technical success. That is the way it was with the atomic bomb.”

— Phil Zimmerman, PGP inventor and Silent Circle co-founder, in an interview with Om Malik