So some rough math shows that if you assume that the valuation of Groupon at $20 billion is based on that database of 56k merchants, you come out with an expected value of around $350k per merchant. That seems highly dubious to me, for a few reasons.
1. Many of these businesses are small restaurants, bars, etc. Notorious for going out of business.
2. The ones who don't go out of business can easily switch to other discount coupon providers.
Personally I've somehow ended up with way too many discount coupon providers sending email to my inbox. I suspect I'm not alone. Presumably I'm also not alone in the other behavior I see in myself - of those providers (Groupon, Living Social, Gilt Group, Bloomspot, Yelp deals, ... there might be more... I could care less), I am least likely to open Groupon emails.
Your back of the envelope calculations do show how seemingly ridiculously overvalued Groupon is.
However, one also has to look at what kind of business you can compare Groupon with. My guess it is taking over part of coupon and other marketing companies.
What kind of valuations do those kind of "old school" companies have? I take the market is rather segmented. That is what kind of cash flow were they producing, what is their price to sales ratio and EPS?
1. Many of these businesses are small restaurants, bars, etc. Notorious for going out of business.
2. The ones who don't go out of business can easily switch to other discount coupon providers.
Personally I've somehow ended up with way too many discount coupon providers sending email to my inbox. I suspect I'm not alone. Presumably I'm also not alone in the other behavior I see in myself - of those providers (Groupon, Living Social, Gilt Group, Bloomspot, Yelp deals, ... there might be more... I could care less), I am least likely to open Groupon emails.