Figma’s 31-year-old cofounder and CEO, Dylan Field, struck the largest software merger deal in recent tech history at an unfortunate time. On Monday (Dec. 18), the Silicon Valley software startup announced it will scrap its $20 billion merger with industry titan Adobe (ADBE) amid growing regulatory opposition to the deal in multiple countries where the two companies operate.
Adobe announced its plan to acquire Figma in September 2022 in what would have been the largest software merger since Salesforce acquired Slack for $28 billion in 2021.
Figma’s market value is less than one-tenth that of Adobe, but its cloud-based design software is a direct competitor with Adobe products, which raised antitrust concerns among regulators on both sides of the Atlantic. The U.S. Justice Department, the U.K. Competition and Markets Authority, and the European Commission (the European Union’s executive body) had all prepared to challenge the merger. The pressure eventually rose to a point where Figma and Adobe decided it would be for the best to abandon the deal before being dragged into a formal fight with regulators. Under the agreement, Adobe will pay Figma a $1 billion breakup fee.
“We both have seen how the path has been narrowing,” Field told the New York Times yesterday (Dec. 19) in his first interview since Monday’s announcement. “It’s frustrating and sad that we’re not able to complete this.”
Field said the regulatory climate around mergers and acquisitions has changed since Figma announced its deal with Adobe 15 months ago. “Ultimately there is some gap between how regulators understand our business and how we understand our business,” he told the Times. Field acknowledged that regulators’ opposition to the merger means Figma probably won’t be able to find another buyer.
“It is important in digital markets, as well as in more traditional industries, to not only look at current overlaps but to also protect future competition,” Margrethe Vestager, the head of the European Commission’s competition policy, said in a statement on Monday.
Figma was founded in 2012 when Field was an undergraduate student at Brown University studying computer science and mathematics. He eventually dropped out to run the company full-time. Figma is backed by venture capital firms, including Index Ventures, Greylock Partners and Kleiner Perkins, according to Crunchbase. The company currently employs about 1,300 people—double the size when it struck the Adobe deal in 2022.
