Reuters reported On Thursday, Google parent Alphabet is exploring the possibility of buying Boston-based HubSpot, a CRM and marketing automation company with a market cap of more than $33 billion – a figure that continues to grow. climb according to these reports.
If such a transaction were to go through, the cost would likely be quite substantial, implying a significant premium to current value. The company should be motivated to sell and become part of the search giant. It’s worth noting that the two companies already have a relationship – a partnership to use Google ads to drive sales in HubSpot – which can sometimes be the start of an acquisition discussion like this.
Even though Google/Alphabet has been extremely greedy over the years, the biggest deal ever was to spend $12.5 billion for Motorola Mobility in 2011. He later sold it to Lenovo for only $2.91 billionso he would have reason to be coy about a much higher price. Most recently, the largest deal involved spending $5.4 billion on a security intelligence platform. Mandiant in 2022. Google typically stays below $3 billion, so a deal of this size would be highly unusual for the company.
Combine this with the austerity program that most tech companies have implemented in recent years and a warning from Google CEO Sundar Pichai in January that more job cuts were comingIt’s not the type of deal that seems likely in a climate of belt-tightening, and certainly one that might be difficult to justify to employees if those kinds of optics actually matter. Still, with a massive $110 billion cash hoard at the end of last year, it certainly has the liquidity to take the plunge if it so chooses.
Another problem the company could face in trying to buy HubSpot is a regulatory environment hostile to large deals. The US, UK and EU have been closely monitoring large deals lately. Some, like Adobe’s attempt The $20 billion purchase of Figma was not finalized due to competition concerns. It’s not clear whether Alphabet would face the same issues with a CRM tool. HubSpot faces some pretty strong competition from Adobe and Salesforce, both well-capitalized companies, so this would by no means give Google a lock on this market, but if there’s a risk, there will be certainly a termination fee to protect against this. , another factor that the company should take into consideration.
The question is how likely is such an agreement to materialize and what would it bring to businesses that the existing partnership does not allow them to obtain. As one analyst told me, it seems unlikely, but you never know.