Reuters reported on Thursday that Alphabet, Google's parent company, is exploring the possibility of buying Boston-based HubSpot, a customer relationship management and marketing automation company with a market value of more than $33 billion — a number that is rising based on those reports.
If such a deal were to occur, the cost would likely be very large, including some significant premium to the current value. This should be to motivate the company 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 at HubSpot — which can sometimes be the start of an acquisition discussion like this.
Although Google/Alphabet have been very acquisitive over the years, the biggest deal they ever made was spending $12.5 billion on Motorola Mobility in 2011. They later sold it to Lenovo for just $2.91 billion, so they'll have reason to be ashamed From purchase. Much greater price. Most recently, the largest deal involved spending $5.4 billion on security intelligence platform Mandiant in 2022. Google typically stays under $3 billion, so a deal of this scope would be largely out of character for the company.
When you combine that with the austerity program most tech companies have implemented in recent years, and Google CEO Sundar Pichai's warning in January that more job cuts were coming, it's not the kind of deal that seems likely in a tightening climate. And it certainly might be hard to justify to employees if that kind of optics were really that important. However, with a massive cash pool of $110 billion available as of the end of last year, it certainly has the funds to make the move if it wants to.
Another problem the company may face in trying to buy HubSpot is a regulatory environment hostile to large deals. The US, UK and EU are watching big deals closely these days. Some, like Adobe's attempt to buy Figma for $20 billion, didn't make it to the finish line due to competitive concerns. It's not clear that Alphabet will face the same concerns with its CRM tool. HubSpot faces very strong competition from Adobe and Salesforce, which are two well-capitalized companies, so this won't give Google a lock on this market by any means, but if there is a risk there is certainly a termination fee involved to hedge against that which is another factor that should The company should take this into consideration.
The question is what the likelihood is that such a deal will come to fruition and what it will offer companies that they can't get from the current partnership. As one analyst told me, it doesn't seem likely, but you never know.
