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TheStreet Open House

5 Technology Acquisition Targets

Gilt Groupe

Recently appointed Gilt Groupe CEO, Michelle Peluso, is said to have the right credentials to take the company public. When asked about IPO prospects, Gilt execs say that they are on that track, but Peluso says she's not ready to commit to a timeframe. Yet the markets have rebounded and Gilt's core businesses became profitable in December, so why wait? Perhaps the company is open to alternative options.

Gilt's recent turn to profitability may make it a more attractive target to strategic acquirers. Corporations like Macy's (M), Louis Vuitton, or Amazon (AMZN) could create potential synergies. The e-commerce site not only brought in $600 million in revenue last year, but Gilt Groupe has also become a notable fashion brand. Nordstrom (JWN)acquired competitor Hautelook for $270 million in 2011.

Vice Chairman Susan Lyne didn't rule out an acquisition, when interviewed in 2011 while she was CEO. Lyne said that though "anything can happen," she talked up the merits of being a private company. At the end of the day, most companies would sell themselves for the right price.

It's possible that Groupon's (GRPN) struggles as a public company have left Gilt feeling spooked. Though Gilt focuses more on discount goods and Groupon focuses more on discount services, both companies have their hands in each others businesses, with Gilt purchasing Groupon competitor, BuyWithMe, in 2011. As we saw with Groupon, it's difficult to be a public company in an industry with minimal barriers to entry. Companies like Gilt benefit when they remain a step ahead of competition. Otherwise market saturation, drives profits down. It's hard to stay ahead of the game when your strategies are publicly revealed. Gilt would be wise to carefully evaluate investor appetite before pulling the IPO trigger.

Gilt has already raised money at a billion dollar valuation. The e-commerce site has $221 million in venture funding, dating back to 2007. If Gilt doesn't get a great offer, an IPO may be their only option for repaying their investors in a timely fashion.

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