HubSpot, the Boston area’s largest software firm, could be on the block.
Search giant Google has been discussing terms of an acquisition with the Cambridge-based software developer that makes sales, marketing, and customer service apps aimed at small businesses, according to multiple wire service reports. Reuters reported in April that Google was considering bidding for HubSpot.
If a deal comes to fruition, HubSpot would likely be Google’s biggest acquisition to date due to its stock market value of about $30 billion. And it would be the biggest local tech acquisition since Microsoft’s purchase of Nuance Communications for nearly $20 billion in 2021.
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HubSpot did not respond to a request for comment and no formal deal has been struck yet, according to the reports, which cite unnamed sources.
Started by MIT Sloan School of Management students Brian Halligan and Dharmesh Shah in 2006, HubSpot has grown from a small online-marketing firm into a public company offering a broad suite of business apps that compete with programs from larger companies including Salesforce and Microsoft. Google does not offer similar apps but has been adding features to its cloud platform.
Still, antitrust regulators under the Biden administration have been increasingly opposed to acquisitions by big tech companies. In addition to filing antitrust cases against Apple, Amazon, Meta, and Google, the US government has tried to block the companies from acquiring smaller rivals. Amazon called off its acquisition of iRobot in Bedford in January amid reports that the Federal Trade Commission planned to challenge the deal. A few weeks later, FTC Commissioner Rebecca Kelly Slaughter said her agency was “extremely focused” on blocking more deals.
In the current environment, a Google-HubSpot deal would draw intense scrutiny and likely a lawsuit from the FTC or Department of Justice, according to Boston University law school professor Keith N. Hylton.
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“The Biden administration and most politicians on both sides of the aisle have been saying that we need to go after big tech on antitrust grounds,” Hylton said.
The recent efforts have sought to block mergers such as iRobot and Amazon, even when the combining companies are not direct competitors, Hylton noted.
But “courts are pushing back,” he said. Regulators failed to convince judges to block Microsoft’s $69 billion purchase of video game maker Activision and Meta’s deal for startup VR firm Within Unlimited. “The problem is it doesn’t usually get to court, because the whole point of the merger evaporates while tied up in litigation,” he added.
The possible deal for HubSpot comes after strong growth during the pandemic has started to slow. Revenue jumped 47 percent in 2021, 33 percent in 2022, and 25 percent last year. In its current forecast for 2024, HubSpot is expecting sales growth of 18 percent. The company cut 500 people, about 7 percent of its workforce, last year.
“We’re still operating in a very cautious buying environment and we continue to see that caution across all of the segments within our customer base,” chief executive Yamini Rangan said on a call with analysts on Wednesday. Rangan was not asked about the Google reports and did not mention any acquisition talks on the call.
HubSpot also experienced some top-level turnover last month. Chief customer officer Rob Giglio jumped to design software company Canva and will not be replaced. And longtime chief people officer Katie Burke left after more than 11 years at the company.
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Google has a long history of acquiring Boston-area tech firms. It bought airline scheduling and pricing startup ITA Software for $700 million in 2010 and data-backup unicorn Actifio in 2020. The search giant also owned Waltham robotics company Boston Dynamics from 2013 to 2017. And it has made smaller acquisitions including Zync, Stackdriver, and Crashlytics. But all those deals were made before the Biden administration’s crackdown on tech giants buying smaller companies.
Aaron Pressman can be reached at aaron.pressman@globe.com. Follow him @ampressman.