Industry sources are saying that the No. 2 daily-deal merchant, LivingSocial, is in danger of being broken up or sold off. The market for daily deals has changed as companies such as American Express and Bank of America enter the market. "The daily deals space is saturated, and it never provided tremendous value to merchants. And that was the fundamental flaw in the business model," says Forrester Research analyst Sucharita Mulpuru-Kodali.