4 ms·

Does anyone know what the threshold for an "immaterial" transaction is in the case of Groupon? I'm trying to at least get a sense of the price.

• jacquesm 10y ago
  There is no absolute threshold it is more a matter of whether or not you could argue that your decisions would have been different had you known about it. That leaves a lot of legal wiggle room.
  • downandout 10y ago
    Well but I think the rule that most companies generally use is if it's under 5% of assets. That's why I was asking.
    • jacquesm 10y ago
      That really depends on the situation. For instance, even a small amount might make the difference between 'profitable' or 'not profitable' and that could easily trigger sell orders and send the stock down, which would make that small amount material. So what is material depends on the eye of the beholder. Also, if it's good news then there will be a higher threshold for what is material than when it is bad news.
  • epa 10y ago
    If any ratio below is above 10%, you may consider it material 1) acquired assets / groupon total assets 2) acquiree pre tax income / groupon pre tax income 3) purchase price / total assets Groupon has 1.7B in total assets. By looking at criteria 3, this means the purchase would have been at maximum 20% (340M - Wont get into reasons why we use 20%, but this is the ceiling) or less. The price was likely in the 20-75M range, if living social contributed to less than 10% of the net loss of groupon (100M), and their assets were under 50M (likely).