According to Reuters on Thursday, Google's parent firm Alphabet is considering purchasing Boston-based HubSpot, a marketing automation and CRM business with a market valuation of more than $33 billion, which has been steadily increasing.

Should such a transaction take place, it would probably come at a high price, with a sizable premium above the market value. The firm would need to be persuaded to sell and join the massive search engine. It's important to remember that the two businesses currently work together, partnering on the usage of Google advertisements to boost HubSpot sales. This kind of conversation can occasionally lead to an acquisition discussion.

Although Google/Alphabet has been quite acquisitive throughout the years, the $12.5 billion purchase of Motorola Mobility in 2011 was the largest transaction the company has ever completed. It would have good reason to be wary of a much higher price tag because it eventually sold it to Lenovo for only $2.91 billion. The biggest transaction, which occurred more recently, involves paying $5.4 billion in 2022 for the security intelligence platform Mandiant. A transaction of this size would be completely out of character for Google, which typically stays around $3 billion.

That, along with the austerity measures that the majority of tech companies have been implementing, and Google CEO Sundar Pichai's January warning of additional job cuts, make this an unlikely deal in an environment where budgets are tight. It may also be difficult to defend to staff members if those kinds of optics are important. But as of the end of last year, it possessed a massive cash hoard of $110 billion, so it has the means to act if it so chooses.

A hostile regulatory environment for huge mergers is another potential obstacle the corporation may encounter in its attempt to acquire HubSpot. These days, the EU, the US, and the UK are keeping a careful eye on big transactions. Some, like Adobe's $20 billion bid to acquire Figma, were derailed by worries about competition. With a CRM tool, it's unclear if Alphabet would have the same worries. This wouldn't give Google a monopoly on that market by any means, as HubSpot faces strong competition from well-capitalized companies like Adobe and Salesforce. However, if there is a risk, there will undoubtedly be a termination fee associated to protect against that, which is another factor the company would need to consider.

What would the firms gain from a merger that is unlikely to succeed and what advantages would the companies have over their current partnership? It doesn't feel plausible, but you never know, one expert told me.