Back in 2010, Google (News - Alert), the titanic search engine, offered to buy Groupon, then a local startup that had been operating for just two years, for $5.75 billion. Groupon turned down Google's offer, and now we're finding out just why. The reason is both simple and shocking: Groupon was actually worth more than that at the time, according to some figures.

While on the surface, a $5.75 billion deal sounds like a terrific move that most any company, especially a startup like Groupon, should cheerfully leap at, the deal Google proposed for Groupon actually had three primary issues, which is what writer Frank Sennett discovered while writing a book about Groupon. Basically, the Google deal would have offered an $800 million breakup fee, or a fee paid in the event a deal doesn't actually go through. Considering that antitrust authorities were already, reportedly, looking at the deal with some skepticism, the breakup fee was regarded as too small.

Additionally, Groupon investors like Accel's Kevin Efrusy, believed that Groupon had a fair likelihood of growth beyond their current level, and thus accepting Google's offer would have been premature. Lastly, one of Groupon's top researchers, Nitin Sharma--a former Google staffer--pointed to a way that Groupon could increase its revenue by a factor of ten just by using its data better.

The deal was shut down by December, and Groupon went on to its IPO. While the IPO's progress so far has been shaky, including a fall in share price from half its IPO value, Groupon is still currently worth more than Google's $5.75 billion offer, at last report, though not by a wide margin.

It's the kind of question that some companies will have to face: is a bird in the hand truly worth two in the bush? In Groupon's case, the answer, for now, seems to have been no. It certainly couldn’t have been an easy decision to turn down billions of dollars on the strength of future projections and jumps of intuition, but for Groupon, it was a decision smartly made, even if its stock is down against its IPO launch levels. The ultimate validity of that decision will remain to be seen, but for the time being, it looks like they made the smart move after all.