Adobe Buys Figma For US$20 Billion

Figma is a collaboration platform for software developers, and it’s been one of the leading players competing against Adobe’s version of the same kind of platform. This is a big deal because, for a while, Wall Street bought into the belief that Adobe had the superior software for creatives. But in recent years, competitors have popped up, and investors’ faith in Adobe has dwindled.

Well, it looks like Adobe is making a move to get rid of this competition because it just agreed to buy Figma for US$20 billion in a half-cash half-stock deal. These kinds of buyouts don’t happen too often in the tech industry, and this one is raising some eyebrows for how expensive it is. Figma was only valued at US$10 billion during its fundraising wave last year. Investors don’t think it’s a great bet, and the company saw its biggest one-day stock drop since 2010 right after the deal was announced.

Figma will stay on as a stand-alone platform, and Adobe’s CEO says that the merger benefits “literally anybody who is a knowledge worker.” The deal is expected to close in 2023 once all the details are sorted.

Key comments:

“The productivity tools of the future will be web-based, multi-player, and infused with a new generation of capabilities for creative expression that Adobe is uniquely positioned to provide,” Adobe said in a statement on their blog. “Figma has built a phenomenal team, product and community and we want to preserve this.”

“Figma was at the scale that it was a serious stand-alone company – the path was to go public,” said Figma board member Mamoon Hamid, a partner at Kleiner Perkins. “The right company made us an offer we couldn’t refuse.”

“The strategic decision appears to make sense – better to buy than build, and take out the disrupter before you get fully disrupted,” said Mirabaud analyst Neil Campling to the Financial Times. “However, a $20bn price tag smacks of a sense of desperation and clearly had to buy the company – before Microsoft did.”