Figma and Adobe abandon proposed merger

[Pure speculation; I don&#x27;t work in the UI space at all, and at neither of these companies]<p>I wonder if Adobe is secretly happy about this. They were acquiring Figma at the peak of the market (for growth stock&#x2F;startup valuations) because of the existential risks that Figma was threatening, due to their collaborative development UX.<p>But since then:<p>* Startup valuations have fallen. Ignoring regulatory concerns, a new acquisition deal today would be cheaper.<p>* Gen AI and Adobe Firefly are the new rage, and Adobe has probably captured back both mental and market share from Figma. And Adobe can now add collaborative features to Firefly, and it doesn&#x27;t even have to be as good as Figma&#x27;s to win.<p>So paying the 1B breakup fee is probably the cheapest and best option for Adobe at this time.<p>Meanwhile, Figma employees, expecting a big payout, are probably a bit demotivated at this point. And potentially, they might have been working on integrating into Adobe over the past year, so they might have even slowed down in their development pace.

I think this is great. Figma gets a free undiluted infusion of 1B cash. I’m surprised break-up fees aren’t negotiated as an investment instead of a pure cash transfer. Sure it may have impacted company focus, it didn’t impact their revenue that much (1.5x growth vs 2x growth in previous years although that could have also been caused by an adverse economic climate with sales slowing across many companies and industries). The one-time 1B infusion puts their revenue growth quite a bit higher for 2023 than they would have had organically I suspect (4x growth vs best case of 2x). If Figma fixes their sales trajectory in 2024 this bodes extremely well for them. They do need to have a better story about generative AI which is a real thing in their space (e.g. wireframe -&gt; mockup automatic conversion, wireframe construction assistants, etc etc). Will be interesting to see if they build that in-house or via acquisition.

That is wild. It&#x27;s a good thing as it means Adobe won&#x27;t ruin Figma like they did with so many great software products before, but just imagine founders, investors and employees, thinking they had a really good exit.. That must hurt, I hope they can stay motivated.<p>If Adobe can&#x27;t buy them, what other exit options do they have? Go public?

Figma got out better than it was before. It&#x27;s still a strong product. And Adobe abandoned XD basically giving up this market to Figma.

Renewed anti-trust is an interesting experiment. I don&#x27;t what the consequences will be, but I am excited to find out!<p>If a nothing else, I want people to think &quot;we should try more policy experiments to become wiser&quot; rather than &quot;oh no, effect uncertain, better stick with status quo&quot;.

&gt; Fifteen months into the regulatory review process, Figma and Adobe no longer see a path toward regulatory approval<p>How in the world did it take fifteen months for regulators to reject this? That’s an absurdly long time to be operating a business in limbo, and I have to assume it’s the regulators dragging their feet since the companies have every incentive to move quickly.<p>I don’t have an opinion on whether or not the merger should be approved, but regulators need to make up their minds quicker or else you can expect a serious chilling effect on M&amp;A. Can you imagine agreeing to get acquired knowing that it can take up to 2 years to close? Anyone operating a real business would be crazy to sign on for the distraction.

There&#x27;s a $1B fall through fee, I assume that gets paid to Figma now?<p>I wander if that will make its way to early employees who were hoping for a liquidity event.

On the one hand, as a designer who uses Figma every day, this is great news. On the other hand, the fact that Dylan Field was willing to do it in the first place felt like a bit of a heel turn. Yeah, it&#x27;s a lot of money, I know. Maybe I&#x27;m alone in this, but I&#x27;ve already shifted my expectations for the long term direction of the product from &quot;they can do no wrong&quot; to &quot;when is the other shoe going to drop?&quot;

I can not describe how happy this makes me. Fuck Adobe. I will never forgive them for buying and killing Macromedia.

While I do see this as great news (for all the reasons others have outlined), I wonder how this will impact VC in the future; If the current goal is for companies to get VC money, burn that cash for years and years and years, and then have a huge IPO or acquisition (that makes it all worth it), it would seem regulatory issues would start to scare away investment.

Best outcome for consumers. I really hope the experience was expensive enough for Adobe (due diligence, lawyer fees, &quot;lobbying&quot; 3-4 different governments, $1B break-up fee) that the entire big tech M&amp;A market takes a hit.

Great news. Adobe is already the kind of company that should be forcefully closed down for scamming people with their subscription practices.<p>The sign up, and cancelling process of their various services are so &quot;dark design&quot; it&#x27;s criminal. I&#x27;ve had to wait in a chat window for days to have a service cancelled after signing up for something i clearly didn&#x27;t sign up for, a yearly payment instead of a monthly with no warning for a very expensive suit, and many are in the same boat almost bankrupting entire small companies.<p>More and more places does this and they should all banned and their CEO&#x27;s put in jail because they prey on vulnerable people, steal millions and waste everyone else&#x27;s time.<p>I&#x27;m not kidding one bit with the jail thing, lines have been crossed so much it&#x27;s getting ridiculous now, i don&#x27;t care how rich or powerful you are. This is why we need strict regulation and serious consequences for CEO&#x27;s and shareholders of straight up criminal companies.

Wonderful news. Adobe was bound to ruin this product, whether on purpose or not. This is a win for the consumers (for once).

I see a lot of people in the thread thinking this is a good thing, it&#x27;s not.<p>First of all the reason for the UK not allowing the merger is completely absurd and based on a false premise which is most likely based on not understanding the field they are regulating.<p>Regulation based on speculation about the future means that regulators can simply just make up reasons. Thats akin to when kings could just make up reason for their ruling. We were supposed to move away from that so that rule of law was the base.<p>Second, the fact that the UK can kill a deal like this is wildly problematic and unfortunately not the first time. They did the same with Facebook and Giphy where it made no sense either. It&#x27;s immature and they obviously aren&#x27;t understanding the field they regulate. Talk about undermining the growth of society.<p>Lastly I see a lot of people saying exits is not a good thing and shouldn&#x27;t be the purpose. But the fact is that a healthy M&amp;A culture is good for startups as that will encourage investors. Once you start killing the ability for exits by introducing such unquantifiable into the settings you are making investors more nervous of spending their money and much more risk averse.<p>Sad.

Why did Figma want to sell itself to Adobe in the first place?<p>Even though their revenue is only about $400MM, As far as I know, they make a very healthy profit (operating margin of ~90%), and they’ve also been expanding through organic and acquisition means (e.g. they bought Diagram).<p>Is it because they see the ability to grow the company’s products even more given the Adobe footprint?

Good news. I guess there are some valid (societaly desirable) reasons for companies to buy other companies, but this doesn&#x27;t seem to be one.<p>Now, I want to read that Microsoft is abandoning the Activision&#x2F;Blizzard acquisition, a similarly anti-competition deal.

If countries want to heavily regulate business deals, I think the quid pro quo should be a tax system that provides a good way for founders and early employees to take some money off the table <i>without</i> having to sell to big companies like Adobe, by going public, or having half of any gain wiped out in taxes. Why shouldn&#x27;t those folks able to pick up a lump sum for their work and the risk they took? They may as well have got a job at a big enterprise if an annual paycheck was all that mattered, and then you end up with fewer new companies and entrepreneurial risk-taking.

I’m just shocked that it’s been over a year since this merger was announced, I feel like it was sometime this summer, turns out it was last summer!

Great news for Figma lovers.

As someone who enjoyed using Figma, this is an excellent news.<p>However, I am afraid they will sell to someone else. Namely, Microsoft.

I am curious if XD will still stay EoL or if they write a blog post about it&#x27;s bright future in 1-2 days.

I don&#x27;t use Figma or Adobe tools so I don&#x27;t really know or care about this acquisition. It seems like public opinion is split - some saw this as a good thing and others as a bad thing for Figma.<p>Who I really feel bad for is some of the early employees that just saw life-changing amounts of money vanish in the blink of an eye.<p>I can&#x27;t imagine how gutted they must be headed into the Holidays. Obviously that value isn&#x27;t truly <i>gone</i> - but it certainly changes things, and I am sure many of them did not plan for this.

Adobe acts like a proper &quot;wealth manager&quot; and not a creative company - good for Figma!

&gt; The decision by Adobe and Figma to spike their $20 billion merger on Monday dented the imminent dream of startup riches for Figma investors and employees. But Figma’s business is still growing quicker than that of most mature startups, potentially putting it in position for an initial public offering in 2025 or later. And the billion-dollar breakup fee from Adobe will strengthen Figma’s already robust balance sheet.<p>&gt; The design software firm expects to finish this year with over $600 million in annual recurring revenue, an increase of more than 40% over the past year, people familiar with the matter said. The San Francisco–based company has also been generating cash for a few years, the people said. That financial picture likely makes it one of the best-performing late-stage private tech companies, particularly in a year when many firms have struggled with sagging growth rates as corporate clients have cut their software spending.<p><a href="https:&#x2F;&#x2F;www.theinformation.com&#x2F;articles&#x2F;figma-grew-fast-even-as-executives-failed-to-clinch-adobe-deal" rel="nofollow noreferrer">https:&#x2F;&#x2F;www.theinformation.com&#x2F;articles&#x2F;figma-grew-fast-even...</a>

The core of what Adobe offers is centered around a deteriorating print paradigm with digital capabilities tacked-on. Figma is of the Web whole cloth. They may look similar and do similar things, but there&#x27;s a reason they made a move. Adobe has done a few cool things in the interim, but nothing that truly compensates for the jank eroding their cloud bundle, which is mostly smoke and mirrors (and if that&#x27;s your thing, davinci or blender are probably what you&#x27;re reaching for).

So will Adobe put more resources to help their pre-maturely abandoned XD catchup?

$1 billion termination fee split between 900 employees = happy times.<p>I’m sure that will happen.

Yeah that&#x27;s sad because couldn&#x27;t pull a VMWare onto unsuspecting UX desgin community I suppose.<p>What&#x27;s wrong with staying a small profitable company that loves what it builds and cares for its customers?

This is sad for the overall M&amp;A market. Companies are going to be scared to enter into these agreements because it’s just a waste of time and money when it inevitably ends up like this.

What about this playing a role?<p>Is the role of anti-trust, big tech regulation and regulatory fees playing a bigger role here?<p>Is the era of AI more in favour of say both Figma &#x2F; Adobe competing vs collaborating - similar datasets?<p><a href="https:&#x2F;&#x2F;edition.cnn.com&#x2F;2023&#x2F;12&#x2F;19&#x2F;tech&#x2F;google-play-store-settlement-hnk-intl&#x2F;index.html" rel="nofollow noreferrer">https:&#x2F;&#x2F;edition.cnn.com&#x2F;2023&#x2F;12&#x2F;19&#x2F;tech&#x2F;google-play-store-se...</a>

A consideration: could these regulatory issues not rather be some welcome pretense for Adobe to cancel the merger since Adobe by now realized that they would overpay for Figma?

I wonder if Figma is cashflow positive. They must&#x27;ve hired an army of people over the past 18 months. The $1billion cash infusion will help for sure.

Figma is VC-funded. Now that they’re not going to be part of Adobe, they’ll just more slowly turn into another Adobe because the investors want the exit.<p>Prices will creep up, product segmentation will be introduced, pop-ups pushing expensive service add-ons will eventually appear. And when the revenue number is pumped enough, it goes public or is sold to private equity which has no trouble with antitrust regulators.

Since due diligence can take 12-24 months, I wonder what other than a much lower valuation being worth it caused this<p>Did Adobe get or figure out enough tips and tricks for their other products?<p>I have used adobe a bit over the years but no relation to either group.<p>That is a lot of subscription to walk away from for a company who is good at subscription, unless one of their parked projects was able to be written in webassembly.

I&#x27;m wondering why is there zero competition for Figma? I understand their app is basically a browser-like engine running inside the browser - which is cutting-edge tech, tough to copy, etc.<p>But given enough interest in this space and the valuation Figma has now - I&#x27;m wondering why isn&#x27;t other big tech companies not building their own Figma alternatives.

So, which company is Figma going to try to sell itself off to next? Atlassian maybe? I guess that Microsoft wouldn&#x27;t be interested since they abandoned Expression&#x2F;Blend&#x2F;etc., Apple isn&#x27;t in the market for web tools, and Miro is probably too small. So, Atlassian makes some sense to capture more of the developer audience.

&quot;The companies have signed a termination agreement that resolves all outstanding matters from the transaction, including Adobe paying Figma the previously agreed upon termination fee.&quot; - that&#x27;s from the announcement on the Adobe blog. Does that mean that they do not have to pay the $1bn break-up fee to Figma now?

Imagine being Dylan Field staring at a $1 billion+ payday, and the government tells you that ain&#x27;t happening, lol

regulators in the eu and us didn&#x27;t seem to mind this, a few select regulators in the uk for some reason seemed to care off of some strange speculation.<p>this seems like a really bad thing that it was held up for so long and without any good reasoning. nightmare scenarios both in and coming out of the uk right now

Anyone know how this outcome is affecting Figma employees? I can imagine it&#x27;s a huge letdown waiting 1.5 years for a big liquidity event and having it evaporate. Do employees see any benefit from that $1B termination fee?

This is good news for Figma. They make amazing products and the last thing they need is the Adobe enshitification.<p>Adobe needs to get their shit together. 15 years ago they were universally loved and now everyone hates them. Their software is super bloated and Creative Cloud runs so much crap in the background even when you&#x27;re not running any Adobe app and even when you&#x27;ve disabled its background apps in macOS.

I think it&#x27;s good for us users. We need more companies to fight with each other. We can&#x27;t sell everything to one company.<p>The EU is doing great work, in my opinion.

Honestly, as a Figma user and fan, this is great news. For Figma employees probably not so much.

Can Figma issue bonuses out of the $1B payout?

Bad news for Figma. I am hundred percent sure that Adobe&#x27;s alternative product will dominate the entire design market.

How much does figma lose from a year&#x27;s worth of operational focus being distracted by this impending merger?

That&#x27;s great news.<p>I wish someone would undo Adobe&#x27;s Allegorithmic buyout, they lost all their ambition after buyout.

How hard is it for Adobe to offer a competing product? It&#x27;s not like the new features are deal breakers.

Good. The last thing this worlds is new mergers. It&#x27;s starting to look dystopian out there.

I just feel bad for Figma staff today. Y&#x27;all make a great product, keep your head up!

Wow regulators win for a change!!

Best news ever. I don&#x27;t know anyone in design community who was happy about this.

I don&#x27;t get this. Any designer knows that Figma is the best tool.

Adobe has dodged a bullet; Figma was ridiculously overvalued.

So Figma’s just Omnigraffle with a multiplayer mode?

Probably good for both parties, better for Adobe.

completely unexpected. wonder what this means for the long-term future of Adobe. I only see Figma growing in importance from here

Probably better for the consumer.

someone help me understand: Figma is a UI designer&#x2F;Balsamiq like app worth a billion dollars?

Oh thank god. I&#x27;ve used Adobe tools professionally for about two decades now. They are too big, and their software suffers for it. Sigma is rad. I&#x27;m glad they aren&#x27;t going to get enshitified by Adobe.

dumb question: why do two American companies need an approval from the UK to merge?

<i>breathes a sigh of relief</i>

MSFT acquisition instead..?

i don&#x27;t use figma or photoshop products, but this makes me happy.

This was a dirty dirty move by Adobe, not regulators. Insiders will know what I’m talking about

Sorry my melancholy but it seems that sooner or later everyone sells out.

For the best

Good.

Good.

Can someone tldr why Figma is so important? I’m not familiar with their offering.

crazy

Good! This would have created yet another monopoly and adobe would have ruined the company

Thank fucking god. I am worried though that Figma will take the cancellation fee and start the layoffs to maximize it for an eventual IPO, and then blame the merger.

I’m an ex-Adobe employee who worked on Adobe XD, which is basically Adobe&#x27;s answer to Figma. when Adobe decided to buy Figma, my first reaction was pretty much &quot;Wait, what?&quot; I wrote down my initial thoughts about it[^1], it felt like a losing situation all around - for Adobe, Figma, and all the designers out there. The only folks who really seemed to win were Figma&#x27;s investors.<p>Now, let&#x27;s talk how bad the breakup deal is for Adobe. You&#x27;ve got Elon Musk buying Twitter for a massive 54 billion, with a breakup fee of 1 billion if it doesn&#x27;t go through. But then, there&#x27;s Adobe, buying Figma for 20 billion, and they also get slapped with a 1 billion breakup fee. Musk tried to back out of his deal, no real reason, and didn&#x27;t want to pay the fee. But Adobe? Their deal gets killed by regulators, and they still have to pay the full 1 billion. Makes you really think about the decision-makers&#x27; negotiation at Adobe, do they work for Figma?<p>Before the deal was sealed, Figma didn&#x27;t start integrating their tech with Adobe’s. However, Adobe put XD on the maintaince mode[^2], losing market share since then. Yes, XD wasn&#x27;t as cool as Figma, but it had its sizable share of big corporate users. The data backs this up[^3].<p>The whole fallout from this? For the design community and Figma, it&#x27;s kind of a win. The CEO of Figma is pretty well-respected for how he treats his team. That 1 billion from Adobe might help out the Figma folks who got left in the lurch. Morale over there is still pretty high. But Adobe stopping development on XD? I think that was a misstep. I suspect they might have done that to please the regulators. Now put the team back together and continue development? That takes time for big machine like Adobe, spoken from my past experience. But I am happy XD get to live on, at least hopefully.<p>Here are the references I mentioned:<p>[^1]. My initial thoughts on Adobe acquiring Figma: [Typogram](<a href="https:&#x2F;&#x2F;typogram.co&#x2F;build&#x2F;on-adobe-acquiring-figma&#x2F;" rel="nofollow noreferrer">https:&#x2F;&#x2F;typogram.co&#x2F;build&#x2F;on-adobe-acquiring-figma&#x2F;</a>)<p>[^2]. Adobe XD Enters Maintenance Mode: [Typogram](<a href="https:&#x2F;&#x2F;build.typogram.co&#x2F;p&#x2F;adobe-xd-enters-maintenance-mode" rel="nofollow noreferrer">https:&#x2F;&#x2F;build.typogram.co&#x2F;p&#x2F;adobe-xd-enters-maintenance-mode</a>)<p>[^3]. Design Tool Survey Report: [Survey 2022](<a href="https:&#x2F;&#x2F;uxtools.co&#x2F;survey&#x2F;2022&#x2F;toolkit" rel="nofollow noreferrer">https:&#x2F;&#x2F;uxtools.co&#x2F;survey&#x2F;2022&#x2F;toolkit</a>), [Survey 2023](<a href="https:&#x2F;&#x2F;uxtools.co&#x2F;survey&#x2F;2023&#x2F;toolkit" rel="nofollow noreferrer">https:&#x2F;&#x2F;uxtools.co&#x2F;survey&#x2F;2023&#x2F;toolkit</a>)

It looks like regulators are actually doing their job. I would love to see more of this, along with breaking up companies that have gotten too big for their britches.

Every time a merger fails, an angel gets its wings.<p>Force megacorps to actually compete rather than just snapping up their potential competitors.<p>Force startups to aspire to create an actual product rather than just manipulating the lizard-brain fears of irrational megacorp execs in the hopes of a payout.

Given how Adobe&#x27;s last purchase of a drawing program (buying Macromedia ten years after being told to wait a decade after buying Aldus and it being split off to be acquired by Macromedia and then off-shoring Freehand&#x2F;MX to India and then burying it), good.

Anyone else think this has nothing to do with the regulatory agencies but instead the market has dramatically shifted in the past 15 months in terms of valuations and this is a nice cover to cancel the deal?<p>Figma still gets $1B &quot;investment&quot; without giving up any equity or control and Adobe gets to walk away from a massive $20B fee.<p>Adobe makes $17B a year in revenue, they would need some pretty strong growth out of Figma to justify the price tag especially after valuations came down.<p>But it is nice to &quot;blame&quot; the regulatory agencies for the breakup so that both companies save face.<p>Also just seems unlikely that it was regulatory. Sure Adobe has the market cornered but it doesn&#x27;t seem like this is where the agencies would suddenly choose to care so much. And if it was regulatory, then shouldn&#x27;t those agencies come out and say &quot;We blocked this, no go.&quot;

Excellent news. I think there should be more products, more companies, and more competition. Adobe just buying up it&#x27;s competition will only ever directly hurt consumers.<p>See also, &quot;Adobe says the FTC is looking into its subscription cancellation practices.&quot; <a href="https:&#x2F;&#x2F;www.theverge.com&#x2F;2023&#x2F;12&#x2F;15&#x2F;24003532&#x2F;adobe-says-the-ftc-is-looking-into-its-subscription-cancellation-practices" rel="nofollow noreferrer">https:&#x2F;&#x2F;www.theverge.com&#x2F;2023&#x2F;12&#x2F;15&#x2F;24003532&#x2F;adobe-says-the-...</a>

I don’t even use Figma, but I a glad Adobe won’t be owning them.

What a disaster for Adobe.<p>They signal they can&#x27;t build something to outcompete Figma. Their stock price falls<p>They axe their existing competing product, and is therefore now way behind.<p>They face problems with the acquisition, which makes their stock price fall again because it signals that not only can they not build products they can&#x27;t use their money to buy companies that do.<p>Then it&#x27;s confirmed they can&#x27;t acquire Figma.<p>Then they have to lose 1bn dollars.<p>And that money is going to a competitor that they took seriously enough to try and acquire at a sky-high price.<p>QQ

I tried to cancel an Adobe CC subscription the other day and they wanted to clawback $60 for a $120 yearly subscription. And their customer support wasn’t helpful at all. Needless to say, we don’t need more of this kind of behavior, especially with Figma!

I have no idea why so many people are asserting that the FTC has been sitting on this for 15 months.<p>The first paragraph of the article, FROM FIGMA, says:<p>&quot;Figma and Adobe have reached a joint decision to end our pending acquisition. It’s not the outcome we had hoped for, but despite thousands of hours spent with regulators around the world detailing differences between our businesses, our products, and the markets we serve, we no longer see a path toward regulatory approval of the deal.&quot;<p>The FTC has not been slow rolling this, they have been in discussions. No one wants the FTC to sue unless they have too, especially Figma&#x2F;Adobe ... it sounds like Figma and Adobe have finally admitted that they were not going to win this one.

Not a fun day to be a Figma employee. It’s all “yeah fuck tech monopolies!” until it’s you who will receive a fat payout. Can’t say I’m not playing the same game, hoping for a similar outcome. I can only _dream_ of a $20b acquisition.

I am opening a bottle of champagne as we speak.<p>It is time to remove electron based app and invest in something that will have a proper memory management. Not only 2gb. My phone has more than this.<p>You have cornered the market. Now deliver.

Photographers: is Adobe Photoshop still the king of photo editing?<p>I strongly dislike Adobe’s “subscription only” business model, but it seems the market is telling them that subscriptions are a-OK: Adobe’s profits are very steady and are up 70+% in five years. [<a href="https:&#x2F;&#x2F;valustox.com&#x2F;ADBE" rel="nofollow noreferrer">https:&#x2F;&#x2F;valustox.com&#x2F;ADBE</a>]

Pure speculation: Microsoft is bidding against Adobe<p>1. Figma could benefit from the AI infrastructure from Microsoft<p>2. Figma has outgrown the design tool genre, and is becoming productivity&#x2F;collaboration platform and low-code no-code app builder. Adobe&#x27;s roadmap seems misaligned<p>3. Regulation: Figma is big enough and similar enough to Adobe XD and Illustrator

Amazing news!!!!!!!

The UK regulator blew this deal up. Founders should think twice about doing business in the UK.

Counterintuitively this will lead to more monopolies since with less likelihood of &quot;exiting&quot; startups via mergers and acquisitions there&#x27;ll be reduced interest in venture capital and therefore fewer startups capitalised to the extent that they can compete against large monopolies.

&gt; Figma’s founding vision was to “eliminate the gap between imagination and reality.”<p>While this is the first time I’ve seen their vision written down, it feels like they’ve done a great job in fulfilling this initially for software product design. Excited to see what comes with a renewed independent focus!

This really makes me sad as an aspiring entrepreneur.<p>What would be the use of starting a business if the government can arbitrarily block it from being acquired?<p>I understand this happening in Europe but not America.<p>I think America is going to lag behind in tech entrepreneurship just like Europe and I wonder what the next potential tech entrepreneurship hub will be.

The US should start doing something about these foreign governments meddling in US business before it&#x27;s too late.<p>EU and UK and seemingly everyone else is passing laws and setting up bureaucracies specifically to implement unfair trade restrictions and barriers against US companies and they&#x27;re basically doing it unopposed, you&#x27;d think these actions would at least trigger some tariff threats and WTO complains sadly the government is in a self destruct spiral at the moment.