In September 2022, I shared that Adobe announced it was acquiring Figma for $20 billion. Adobe is publicly traded and has a market capitalization (i.e., valuation) of around $270 billion as of this writing. It’s an established company offering software, including Photoshop, to creatives. Figma was founded around 2011 and offers web-based tools that allow creatives to design and prototype user interfaces and user experiences collaboratively and easily.

Today it was reported that the merger has been called off because Adobe couldn’t get regulatory approval. Adobe will reportedly pay Figma a $1 billion termination fee for walking away from the deal.

Figma’s CEO confirmed the news via a blog post in which he also noted that the company has been executing since the deal was announced. It even hired 500 new people.

This news is bound to be a letdown for Figma team members and investors, who expected a large liquidity event this year. However, this might not be all bad for Figma. For one thing, market conditions have changed materially since this deal was announced. The NASDAQ Composite Index was at about ~11,000 then (on September 22, 2022). The index's 2022 bottom was ~10,200. As of this writing, it’s at ~14,900, or ~35% higher since the announcement of the merger. Another consideration is that if the 500 new hires are an indication of revenue growth, the company could be doing well financially. Last, Figma gets $1 billion for the headache of the last fifteen months, which isn’t bad considering it was valued at $10 billion in its last fundraising round in 2021.

This isn’t the outcome Figma hoped for, but it probably isn’t that bad for them. It could even turn out to be a good outcome. Time will tell. I’m curious to see what 2024 has in store for Figma.