Reuters reported on Thursday that Google’s mum or dad firm, Alphabet, is exploring the opportunity of shopping for Boston-based HubSpot, a CRM and advertising automation firm with a market cap of over $33 billion – a quantity that has been climbing on these experiences.

If such a deal had been to occur, the associated fee would seemingly be fairly substantial, involving some vital premium over the present worth. It must be to encourage the corporate to promote and grow to be a part of the search large. It’s price noting that the 2 corporations have a relationship already — a partnership to make use of Google adverts to drive gross sales in HubSpot — which might typically be the beginning of an acquisition dialogue like this.

Whereas Google/Alphabet has been extraordinarily acquisitive through the years, the biggest deal that it’s ever made was spending $12.5 billion for Motorola Mobility in 2011. It later bought it to Lenovo for simply $2.91 billion, so it will have motive to be gun shy on a a lot bigger price ticket. Extra lately the biggest deal concerned spending $5.4 billion for safety intelligence platform Mandiant in 2022. Google normally stays below $3 billion, so a deal of this scope can be very a lot out of character for the corporate.

If you mix that with the austerity program that the majority tech corporations have been on lately, and a warning from Google CEO Sundar Pichai in January that extra job cuts had been coming, it’s not the kind of deal that appears seemingly in a belt tightening local weather, and definitely one which is likely to be powerful to justify to workers if these sort of optics really matter. But with an enormous money horde of $110 billion readily available as of the top of final yr, it actually has the money to make the transfer if it needs to.

One other difficulty the corporate might face in making an attempt to purchase HubSpot is a hostile regulatory atmosphere for big offers. The U.S., the U.Ok and the EU have been monitoring massive offers intently nowadays. Some, like Adobe’s try to purchase Figma for $20 billion didn’t make it to the end line due to aggressive considerations. It’s not clear that Alphabet would face those self same considerations with a CRM software. HubSpot faces fairly highly effective competitors from Adobe and Salesforce, two well-capitalized companies, so this wouldn’t give Google a lock on that market by any means, but when there’s a danger, there’s positive to be a termination payment concerned to hedge towards that, one other issue the corporate would wish to think about.

The query is what’s the probability of such a deal coming to fruition and what would it not give the businesses that they will’t get from the prevailing partnership. As one analyst mentioned to me, it doesn’t really feel seemingly, however you by no means know.