LivingSocial Slows its M&A Roll

LivingSocial CEO Tim O’Shaughnessy. Photo by Lars Paronen, Reuters.
(Reuters) – LivingSocial, Groupon Inc’s closest rival in the daily deal industry, will slow its pace of acquisitions after a rash of deals in recent years, Chief Executive Tim O’Shaughnessy said on Tuesday.

LivingSocial, part-owned by Inc. has completed eight acquisitions in the past two years, including the purchase of South Korean online daily deal provider TicketMonster in 2011.

LivingSocial buys companies for three main reasons: to expand geographically, to grab useful new technology, and to get talented staff, O’Shaughnessy told the Reuters Retail and Consumer Summit.
“We expanded quite a bit geographically,” he said. “We probably aren’t going to push too hard on that.”

The daily deal industry grew at a torrid pace from 2009 to 2011, with Groupon and LivingSocial snapping up many rivals outside the United States. Growth has slowed this year, which is one of the reasons Groupon shares have lost about three-quarters of their value since an initial public offering last year.

O’Shaughnessy said LivingSocial is focusing on integrating some of its large overseas acquisitions, which is harder to do partly because of language differences.

LivingSocial will continue to look at potential acquisitions, but deals will likely focus more on specific technology that fits with its business or great teams that the company wants to attract, he said.

LivingSocial was a potential IPO candidate until Groupon shares began their steep descent.

The stock market has to be receptive for an IPO to succeed, and at the moment this is out of LivingSocial’s control, O’Shaughnessy said.

However, the company has raised money from venture capital firms and has given stock options to employees, and those actions come with an “implicit promise” of a “liquidity event” at some point in the future, the CEO added.

LivingSocial’s investors and employees came on board within the last three years, which means there is less pressure to complete an IPO or some other type of liquidity event soon, he said.

(Reporting by Alistair Barr; Editing by Tim Dobbyn and John Wallace)

Image Credit: LivingSocial CEO Tim O’Shaughnessy. Photo by Lars Paronen, Reuters.