binarypublishAdobe has cancelled a planned $20 billion purchase of Figma, a cloud-based collaboration software for graphic designers, due to regulatory pressure from antitrust regulatory bodies in the UK and EU. The deal termination will require Adobe to pay a $1billion fee to Figma.
- The mooted acquisition was announced in 2022 and would have been among the most significant of a venture-backed company in recent years.
- San Francisco-based Figma, founded in 2012, has secured more than $333 million of funding from investors including Sequoia Capital, Andreessen Horowitz, Greylock and Kleiner Perkins.
- The Adobe deal would have priced Figma as double its $10 billion valuation from a 2021 funding round.
- Regulatory authorities expressed concern that Adobe’s acquisition of Figma would reduce competition through the removal of a major rival.
- The increased regulatory scrutiny towards acquisitions by larger tech companies could potentially impact the startup ecosystem by limiting exit opportunities for venture-backed businesses. Statistically, M&As account for approximately 90% of successful exit cases for startups.
Adobe’s decision to call off the intended acquisition of Figma highlights the intensifying challenges that tech giants face in expansion through acquisitions due to increased regulatory scrutiny particularly in the UK and the EU.
The scrutinization of M&A deals involving larger technology firms by regulatory bodies has heightened in recent years, culminating in the growing unease amongst investors and analysts about the prospective impact on the startup ecosystem as exit avenues for venture-backed firms are limited. This, in turn, could affect their ability to command favorable exit premiums.
In conclusion, the cancellation of Adobe-Figma deal sheds light on the current more challenging regulatory environment for technology M&A’s and serves as an illustration of potential complications that such major technology acquisitions might encounter in future.
