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Adobe’s (ADBE) ambitious $20 billion bid to acquire cloud-based design juggernaut Figma (FIG) was set to reshape the creative software market. Instead, the failed deal culminated in a staggering $1 billion break-up fee — and a far greater “what could have been,” as Figma’s public market debut this week eclipsed all expectations, leaving Adobe on the sidelines of one of tech’s hottest stories.
The acquisition, agreed upon in 2022, would have seen Adobe pay $20 billion for Figma, bringing its market-leading collaborative design platform into the Adobe fold. However, due to mounting regulatory scrutiny in both Europe and the UK, Adobe and Figma mutually agreed to terminate the deal in December 2023. Under the terms of the agreement, Adobe was required to pay Figma a reverse termination fee of $1 billion in cash — a record-setting penalty that instantly intensified the sting of the failed effort.
A Market Opportunity Lost: $37 Billion and Counting
Adobe’s pain was compounded in July 2025, when Figma finalized its initial public offering (IPO). Priced at $33 per share, the IPO initially valued Figma at around $19.3 billion, nearly matching Adobe’s original offer.
But market enthusiasm was overwhelming. Figma’s shares surged as much as 275% on debut, briefly pushing its market capitalization to nearly $68 billion, and settling around the $57 billion mark post-IPO. This means Adobe, had the acquisition succeeded, would have reaped the value of an asset now worth about $37 billion more than the originally agreed-upon purchase price.
Why the Figma Acquisition Fell Apart
Regulators raised concerns that the deal would quash competition in the collaborative design space, potentially leading to higher prices and less choice for customers. EU and UK watchdogs in particular feared a consolidation of power, given Adobe’s dominance and Figma’s rapid growth. Ultimately, “no clear path for antitrust approval” forced both parties to walk away.
Strategic Consequences for Adobe
- Immediate loss: Adobe’s attempt to leapfrog ahead in cloud-based collaborative design ended with a $1 billion cash outflow.
- Longer-term setback: The company now faces the daunting task of playing catch-up, as Figma grows ever more entrenched as the industry standard for UI/UX design.
- Market competition: Adobe’s own competing tool, XD, must now go head-to-head against a much stronger, well-funded, and public Figma.
For Figma and its backers, the outcome has been transformational. The $1 billion break-up fee, paid in early 2024, was nearly triple the total capital Figma had raised in its lifetime. Now, the IPO’s blockbuster performance has created massive wealth for shareholders, employees, and even some nonprofits, validating Figma’s decision to remain independent.
The Era of Tougher Tech M&A
Adobe’s failed Figma bid stands as a watershed moment signaling increased regulatory scrutiny over Big Tech M&A. It illustrates the extraordinary risks — and costs — now inherent for companies seeking to consolidate fast-growing market leaders.
In the final analysis, Adobe’s $1 billion break-up fee was only the most immediate cost. The true price is the $37 billion value left unrealized, as Figma’s meteoric rise underscores both the promise, and peril, of betting on acquisition over innovation.
How High Will Figma Go?
Investing during and right after an IPO is a risky time. The post-IPO run-up can see a stock soar many multiples, as is currently happening with Figma. This can result in massive gains for investors in a very short amount of time. The stock is up 8% today alone, and even investing right after their debut would have resulted in investors doubling their money at least. But with that volatility comes immense downside risk as well. Many companies have seen similar momentum post-IPO only for the stock to pull back harshly, and take years to see those prices again.
Uber (UBER), for example, had a respectable post-IPO runup but ended up crashing over 50% from its early highs. It took the company about 1.5 years to recover and reach new highs. That’s a long time to be bag holding, especially when the trend here is pretty clear and predictable.
FIG stock currently sits around $124, putting its market cap at $62 billion and P/E ratio at a little over 70. That’s incredibly rich, and it’s not uncommon to see heavy sell-offs after these big post-IPO runups. Valuations that rich aren’t usually sustainable, so investors can expect limited upside from here, with heavy downside seemingly inevitable in the short term.
