Betabeat has learned that Gilt Groupe is in the final stages of acquiring the troubled daily deal site BuyWithMe, which laid off more than half its staff last week to sweeten the deal for potential buyers. The sale is a win for Matrix Partners, who has invested in both firms, and been backing BuyWithMe across three rounds and $30 million in venture funding.
BuyWithMe will officially be part of Gilt starting Nov. 1. The remaining sales staff who were left after last week’s layoffs will be let go with one weeks pay. Gilt gets a lean company consisting largely of technology, a few executives, a large email list of customers and merchants partners in cities around the country.
At one point earlier this year BuyWithMe was consisered the number three player in the daily deal space after Groupon and Living Social. But it stumbled as competitors flooded the market and customer acquisition costs skyrocketed.
After the big layoffs last week, sales staff were asked to take a 25% pay cut. The idea was that after the acquisition, the garnished wages would be made whole. But that is no longer the case, indicating that the purchase price was fairly low.
On a conference call last night, employees also peppered CEO Jim Crowley with questions about unvested stock options. Typically in an acquisition vesting can be accelerated to compensate employees. But Mr. Crowley refused to answer these questions, and it seems like employees may be left holding the bag.
The assets from BuyWithMe will likely be folded in Gilt City, the daily deals offering from Gilt, which yesterday was announced as one of the 14 new partners for Google’s daily deal offerings. Can you smell the consolidation?