Adobe Abandons $20 Billion Acquisition of Figma (theverge.com) 33
Following mounting pressure from regulators in the UK and EU, Adobe and Figma announced on Monday that both companies are mutually terminating their merger agreement, which would have seen Adobe acquire the Figma product design platform for $20 billion. From a report: As a result of the termination, Adobe will be required to pay Figma a reverse termination fee of $1 billion in cash. "Adobe and Figma strongly disagree with the recent regulatory findings, but we believe it is in our respective best interests to move forward independently," said Adobe chair and CEO Shantanu Narayen in a statement. "While Adobe and Figma shared a vision to jointly redefine the future of creativity and productivity, we continue to be well positioned to capitalize on our massive market opportunity and mission to change the world through personalized digital experiences."
Thank God! (Score:5, Insightful)
Best thing that could happen to Figma!
Re:Thank God! (Score:5, Interesting)
Not really.
Figma is now in a very tough spot because who else is going to come along with pockets that deep and acquire them? Their only remaining move is either private equity or going public - either of which is going to result in big layoffs in advance of it.
Re:Thank God! (Score:5, Insightful)
Re:Thank God! (Score:5, Interesting)
...compared to the layoffs if Adobe acquired them?...
Those would have been different people.
During an IPO, layoffs tend to be people who don't impact short-term revenue, such as R&D.
In a merger, the layoffs tend to be redundancies in accounting, HR, admin, marketing, and management.
To have a healthy economy, we want more people doing productive stuff like R&D and manufacturing, and fewer people doing unproductive stuff like HR and marketing. Layoffs for an IPO are the bad kind. Layoffs after a merger are the good kind.
Many big companies have a deliberate policy of outsourcing their R&D. They've found they are inefficient at doing it in-house because of their bigness. So they wait for scrappy startups to innovate and then acquire them. Cisco does this as a deliberate policy. For many startups, an acquisition is their most viable exit strategy. If regulators take that possibility off the table, there will be fewer startups, less innovation, and more people in unproductive jobs.
Figma will struggle to survive. They had ideas that Adobe wanted, so Adobe will now develop them in-house, pulling customers away from Figma. Many Figma employees had options and would've seen a big payout with the acquisition. An IPO will bring in far less capital, so their options are worth less, and many will be underwater. Many will see little opportunity and leave. Many ex-Figma employees will end up working for Adobe.
Re: Thank God! (Score:2)
Another Aâ¦e company has the cash & need to diversify off hardware.
Re: (Score:1)
Cisco does it this way because big companies CANNOT innovate. Their culture does not allow for innovation. So they buy up a successful company that is doing what they wish they could do themselves and then proceeds to ruin said company. Rinse and repeat.
Re: (Score:2)
Who benefits from such an acquisition beyond the investors of Figma looking for an (hefty) exit...?
Re:Thank God! (Score:4, Insightful)
Because the people who invested over 300 million dollars in Figma (https://www.crunchbase.com/organization/figma) expect a return on investment of 5x to 10x, and won't wait 50 years for them to pay that back as a private company.
Re: (Score:1)
Isn't Figma doing well (revenue-wise) on its own?
You can always tell when someone knows nothing about business because they think revenue is what matters.
Pro-tip: Profit is what matters.
Profit = revenue - expenses.
Figma is a private company, so its accounting information is not publicly available.
During the merger, Figma said it had $400M in revenue. It did not release its expenses or profit.
Figma has 900 employees. So over $400k per employee, which is good and better than the industry average. We don't know Figma's expenses, but besides payroll, it likel
Re: (Score:2)
You can always tell when someone knows nothing about business because they think revenue is what matters.
Pro-tip: Profit is what matters.
You can always tell when someone in the peanut gallery thinks they know something about business because they know the difference between revenue and profit, but don't realise that revenue matters far more for startups.
Actual Protip: People have created wildly successful companies and become billionaires on the basis of revenue while not making profit.
Re: (Score:2)
revenue matters far more for startups.
Revenue matters for startups because their exit strategy is often an acquisition and the acquirer expects to cut expenses while retaining the revenue.
But with the possibility of an acquisition off the table, Figma will have to survive on its own, and profit is what matters.
Re: (Score:2)
revenue matters far more for startups.
Revenue matters for startups because their exit strategy is often an acquisition and the acquirer expects to cut expenses while retaining the revenue.
But with the possibility of an acquisition off the table, Figma will have to survive on its own, and profit is what matters.
To a point, yes, but not entirely. An IPO will likely bring in revenue either way. You'll bring in more revenue if you are already profitable, but as long as you aren't losing a lot of money (ignoring money spent towards the future means of production, such as factory construction) and have some reasonable hope of making future profits, you can still probably make enough from an IPO to keep the company afloat for a few years while you get to that point.
Re: (Score:2)
They also just got a check for a billion dollars from Adobe as Adobe didn't do their due diligence to make sure the DoJ wasn't going to object to the acquisition closing.
I'm pretty sure that's going to make survival go a lot easier now that they have a no-strings-attached multi-year runway in front of them.
Re: Thank God! (Score:2)
Re: Adobe adding features to its products to compete:
Adobe's own interaction design product was an abject failure in the marketplace, hence the attempt to buy Figma, whose product was eating everyone's lunch.
Re: Thank God! (Score:3)
Dunno about that. A Billion in cash certainly will make a nice handkerchief to cry into.
I cut my teeth on Adobe products, thought they were a great company with fantastic products, and indeed they were at that long ago time.
But Photoshop reached peak usability around version 4, and the rest of the Creative Suite at about the same time.
The rest has been bloat, distraction and software rental, and they can go straight to /dev/null as far as I'm concerned.
I've been on the Serif Affinity line of tools for a few
Re: Thank God! (Score:2)
"their don't" > they're fine
Blame spellcheck
Re: (Score:2)
Figma burns about 250M / year so 1B will last them 3 years or so - not as long as you may think.
Re: (Score:2)
Figma burns about 250M / year
Source?
Figma's revenue is $400M. So if the burn rate is $250M, that means spending is $650M.
Figma has 900 employees. $650M means spending is $720k per employee.
Payroll is nowhere near that amount. Perhaps marketing is a big expense, but I don't recall ever seeing an ad for Figma.
So where's the money going?
Re: (Score:2)
Figma burns about 250M / year so 1B will last them 3 years or so - not as long as you may think.
That would be about four years, no? And if they IPO, they'll get an additional cash infusion on top of that, which should hold them over for a few more years. So let's say that the IPO brings that number out to 6 years. A mere 63% increase in their revenue doesn't seem unachievable over that time frame. Heck, they could probably achieve that just with the right targeted advertising and by tweaking their price points up or down.
And remember that even a 12.5% increase in revenue would cut their losses to
Re: (Score:2)
First of all, that would be 4 years of runway before even looking at a dollar of incoming revenue, without any share value dilution to get that billion dollars. So you've already failed at the most basic of math.
And you're trying to say that somehow that's not a good thing? They literally have a billion dollars they didn't have yesterday, without having to give anything up for it, other than staying on the strategic roadmap that they already have been executing in case the acquisition didn't go through.
On
Re: Thank God! (Score:2)
You don't seem to know what burn rate means.
Re: (Score:1)
This thing were we stopped making new companies and instead just make buy out targets needs to stop. It's choking off the entire computer industry.
Re: (Score:2)
Well considering that they still have exactly whatever it was that Adobe saw in them, and they have an extra billion dollars to keep the lights on, I have a feeling they'll figure it out before too long.
Why would they lay people off when they just got a billion dollars without having to dilute equity to get it?
Adobe XD vs Figma (Score:2)
Given that Figma is a direct competitor to Adobe XD, I believe the extra scrutiny is warranted. It does potentially ding monopoly type actions.
BTW as a web integrator I care for neither of these, since designers expect there two hour design to result in a two hour web integration session, which is usually furthest from the truth.
Re: Adobe XD vs Figma (Score:2)
You seem to be confusing best thing for customers, with best thing for the company.
It is plainly obvious this is not the "best thing for Figma". Their investors are now very likely to force some changes to either get to profitability or set themselves up for PE.
It is yet to be seen if that will end up being good for customers or not. It is a big unknown.
Re: (Score:2)
Ummm... they just got 1bil of dollars. Maybe they should think how to use this money to earn profit???
I think lots of companies in US don't care about traditional business model and they hope for buyout or raising capital. Where is you product? Where is your income?
When will they stop with the word soup? (Score:3)
It's hard to imagine anything more useless than this ridiculous thing of inventing sentences full of "catchy words" while the person is actually just talking bullshit. Is there any rule that prevents CEOs from simply speaking directly instead of this ridiculous soup of buzz words?
Re: When will they stop with the word soup? (Score:2)
They create a web-based application (that truly doesn't suck for a change - withhold your disbelief) for web, mobile and interaction design, wireframing and (just so-so) prototyping.
Because it's a web app it's platform-agnostic, so no Mac/PC fights between developers and designers. Enterprises like it because they can manage the licenses easily.
It's not exactly the next aerosol butter, but it's pretty good, and solves more than a few problems, and fills a niche nicely.
Re: (Score:1)
Naturally Adobe, the modern-day Oracle, would like to embrace extend extinguish a product like this and rope the customer base into its own predatory pricing instead.
Re: (Score:3)
"While Adobe and Figma shared a vision to jointly redefine the future of creativity and productivity, we continue to be well positioned to capitalize on our massive market opportunity and mission to change the world through personalized digital experiences." It's hard to imagine anything more useless than this ridiculous thing of inventing sentences full of "catchy words" while the person is actually just talking bullshit. Is there any rule that prevents CEOs from simply speaking directly instead of this ridiculous soup of buzz words?
I had some business-speak expert explain it to me once. It's not that spouting bullshit is meant to reach the everyday person. What they're doing is signaling to the golden parachute club that they are a member. They know how to "talk the talk." It's essentially management putting out feelers to other management types, letting them know their down to clown, should the need arise.
So, while it comes off as a fountain of bullshit to normal ears, it comes off as the sing-song orchestration of double-speak and m
Re: (Score:2)
Can confirm that this is correct. In my old job as an IT department manager I had to beg the C suite for adequate funding for this and that, and was mostly told No. I made the mistake of trying to pitch the benefits of the technology and acted as if the CFO gave a flying fuck about having a smoothly operating IT department. Needless to say he did not, and would shoot down almost all of my budget requests.
But THEN I listened to one of those douchey communications mini-seminars promoted by some self-serving h