Corruption in Government Procurement – Bananagate, Lockheed and Operation Ill Wind

On the morning of February 3rd, 1975 Eli Black, the Chairman and President of United Brands Company, arrived early to his office on the forty fourth floor of the Pan Am building in Manhattan.   Using his briefcase, Black broke open the window then jumped to his death.  Investigations into Black’s death uncovered a large conspiracy between United Brands and the government of Honduras. The incident involved taxes on banana exports from the Central and South American countries such as Honduras, Guatemala, Ecuador, Columbia, Nicaragua, Panama and Costa Rica. 

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Everyone Wants to Be Like Groupon

There has been a frenzy of media coverage over Groupon lately after it reportedly turned down a $6 Billion acquisition offer from Google.  Groupon is one of a rare group of companies that has achieved overnight success with an innovative and disruptive approach to the market.   No other startup has gone from launch to $1 Billion in valuation more quickly other than YouTube.  During one span, Groupon increased its valuation by 4X in just 3 months.  And on Friday it was reported that last week Groupon raised nearly $1B in venture capital from large institutional investors including Fidelity, T. Rowe Price and Morgan Stanley.  Rumors that the company is on a fast-track for a potential $15B IPO are circulating as well.  Unlike many of its peers in the social commerce arena, Groupon actually has a business model that generates revenue.  In fact, various reporters have estimated Groupon’s 2010 annual revenues to be approximately $500M.

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How Groupon Could Further Increase Its Valuation Beyond $15B

The New York Times reported that last week Groupon raised nearly $1B in venture capital from large institutional investors including Fidelity, T. Rowe Price and Morgan Stanley.  Rumors that the company is on a fast-track for a potential $15B IPO are circulating as well.  There has been a frenzy of media coverage over Groupon lately after it reportedly turned down a $6 Billion acquisition offer from Google.  Someday I aspire to be confident enough in a growing business to turn away a multi-billion dollar buyout proposition from the likes of a Google.  But in the meantime, I can only imagine what I would do if I were in the shoes of the Groupon management team.  One of the first areas I would explore is expanding the scope of merchandise being sold and the limited geographic reach of the offers.

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