Speculations circulated for months about potential acquisitions of HubSpot, a CRM and marketing software company based in Boston, including rumored interest from Google and other parties. As the rumors continued, HubSpot’s market cap soared to over $30 billion. However, this week, Bloomberg may have finally brought an end to the chaos by revealing that the parties had separated without reaching an agreement. A number of investors in the Boston area were pleased to witness the company’s decision to maintain its independence.
As mentioned in April, the deal appeared to lack logical reasoning. Firstly, the market cap indicates that Google would be making a similar investment in HubSpot as Salesforce did with Slack, a deal valued at nearly $28 billion. If they had paid a higher multiple over the peak market cap, the amount would have been even greater. Given that the largest transaction the company has ever undertaken was valued at $12.5 billion, the acquisition of HubSpot would have been well beyond Google’s usual comfort zone for mergers and acquisitions.
Since it serves huge organizations, Google Cloud will also benefit from this deal. HubSpot prioritizes small and medium-sized enterprises. CRM Essentials founder and principal analyst Brent Leary said the claims were absurd. The end-of-year talk with HubSpot co-founder and CTO Dharmesh Shah stuck with me. In an Eltrys interview, Leary stressed that the firm is focused on SMBs and has no plans to grow into an enterprise. He thought the price tag and item were implausible. 
Maybe it was just wild speculation from a banker, fueling the gossip to maintain the notion and potentially boost the stock price. It’s not unexpected that the stock experienced a 12% drop following the publication of Bloomberg’s story.
HubSpot has established itself as a prominent player in the Boston startup scene since its inception in 2006. This is an illustration of a startup that originated from MIT, then expanded, went public, and established a strong business foundation. In its most recent earnings report, the company disclosed a revenue of $617.4 million, reflecting a significant 23% increase compared to the previous year. Despite the recent decline in stock market value, the market cap on Thursday remained at an impressive $25 billion.
Rob May, a seasoned entrepreneur and angel investor based in Boston, expressed his satisfaction with HubSpot’s decision to remain independent and continue fostering growth in the local tech scene. As a four-time founder himself, with his latest venture being BrandGuard.ai, a cutting-edge tool for developing generative AI guardrails, May recognizes the significant impact HubSpot has had on the Boston ecosystem, generating numerous startups and driving innovation.
According to Greg Dracon, a partner at 406 Ventures, this development is ultimately beneficial for Boston. According to Dracon, it may be disappointing for shareholders who were expecting a sudden surge in profits. However, considering Google’s already significant presence in the area, there are numerous benefits to keeping an independent company with a market capitalization of $25 billion to $30 billion for the Boston ecosystem, as he explained to Eltrys.
Underscore VC general partner Lily Lyman was unsurprised by the discussions’ failure. However, she noted that a successful sale may have temporarily harmed the Boston environment. I think the purchase would have hurt the environment in the next one to three years. It would have slowed innovation and the development of top talent. The corporation would have been concerned about legal difficulties, moving infrastructure from AWS to Google Cloud, and integrating Gemini from OpenAI. These diversions would have distracted from other company priorities, “Lyman said.
However, she highlights the possibility that over time, it is probable that a portion of those employees would have ventured into entrepreneurship. If the deal had been successful, it had the potential to benefit the startup ecosystem in Boston. We could have witnessed a migration of talented individuals who would go on to establish the next wave of innovative startups.
Regardless, if the rumors about Google’s interest were accurate, it seems that the situation has been resolved and HubSpot will continue to operate as an independent company. Fortunately, Hubspot is a thriving company that consistently expands and introduces new ideas. If it can consistently attract top talent in the future, it will remain a strong presence in the Boston ecosystem,” Lyman stated.
