Adobe-Figma (2022-2023): the $20B design-software deal antitrust regulators stopped
On September 15, 2022, Adobe announced an agreement to acquire Figma for approximately $20 billion in cash and stock. At the time, Figma was the de facto standard for collaborative interface-design software and Adobe was the incumbent designer of record (Photoshop, Illustrator, XD). The deal would have removed Adobe’s most credible long-run challenger in design software. After approximately 15 months of regulatory review — including a UK Competition and Markets Authority Phase 2 investigation and parallel European Commission scrutiny — Adobe and Figma announced on December 18, 2023 that they were abandoning the merger because there was “no clear path” to UK or EU clearance. Adobe paid Figma a $1 billion termination fee. The episode is the most-cited example in the 2022-2024 antitrust wave of regulators effectively blocking a software acquisition without a formal final prohibition order.
- Story: Adobe announced acquisition of Figma September 2022 for $20B. EU and UK regulators raised significant antitrust concerns through 2023. Deal terminated December 17, 2023 with Adobe paying Figma $1B termination fee. Figma remains independent. Significant recent blocked-tech-M&A precedent.
- Why it matters: Figma-Adobe is the defining recent blocked-tech-M&A case — demonstrating that regulator scrutiny has increased and that 'killer acquisitions' face significant block risk.
- Takeaway: Regulator scrutiny of tech M&A has increased significantly under more-active enforcement — deals that would have passed previously may now face blocks.
- Takeaway: Regulators are increasingly focused on 'killer acquisitions' where the acquirer purchases a competitor to eliminate competitive pressure.
- Takeaway: Termination fees can be significant ($1 billion for Adobe-Figma) — M&A deals need to account for regulatory risk in fee structures.
Figma-Adobe blocked deal — the four-step story
Figma-Adobe blocked deal by the numbers
Quick facts
Where the two companies stood in 2022
By mid-2022, Figma had built the dominant collaborative interface-design product. The browser-native, multi-user-real-time-editing model that Figma popularized had taken share rapidly from Adobe XD, Sketch, and InVision. Figma’s most recent prior valuation was approximately $10 billion in a June 2021 funding round; the company had broad product-design-team adoption across the tech industry and a growing developer/dev-handoff product surface.
Adobe’s competitive position in design software was strong but aging. Photoshop, Illustrator, and the Creative Cloud bundle remained dominant in print and digital-image design, but for interface design specifically, Figma had become the working tool that designers preferred. Adobe XD — Adobe’s direct Figma competitor — had not gained meaningful share. The strategic case for acquiring Figma was straightforward: Adobe could either watch Figma erode its design-software franchise over a decade or buy the leader at scale now.
The announcement and the regulatory pushback
On September 15, 2022, Adobe and Figma announced the $20 billion deal: roughly half cash, half Adobe stock, with employee retention and earnout components. The deal was approximately twice Figma’s most recent private valuation. Adobe’s stock dropped about 17% on the day of the announcement, reflecting investor concern that Adobe was paying a steep price and that the deal would attract antitrust scrutiny.
The scrutiny came. The UK CMA opened a Phase 1 investigation in early 2023 and referred the deal to Phase 2 (in-depth) review on July 13, 2023. The CMA’s provisional findings focused on horizontal competition concerns (Adobe XD versus Figma) and on broader innovation theories of harm — the argument that even where current direct competition was modest, the merger would remove a future-innovation threat that disciplined Adobe’s pricing and product strategy. The CMA’s indicated remedy approach effectively amounted to prohibition. The European Commission ran a parallel in-depth investigation through 2023 with similar concerns.
How it ended
On December 18, 2023, Adobe and Figma announced the joint termination of the merger agreement. The companies’ statements were closely parallel: both said they continued to believe in the deal’s pro-competitive merits but that there was no clear path to obtaining the necessary UK and EU regulatory approvals. Adobe paid Figma a $1 billion termination fee as required by the merger agreement.
For Figma the immediate outcome was independence with a $1 billion break-fee on the balance sheet and broad public visibility from 15 months of regulatory coverage. The company executed a tender offer in mid-2024 at an approximately $12.5 billion valuation — lower than the $20 billion Adobe deal but well above Figma’s 2021 round. For Adobe the outcome was approximately $1 billion in cost (the break fee), 15 months of management distraction, an unchanged competitive position, and the strategic question of how to defend the interface-design franchise without acquiring the leader.
How RGM thinks about this for M&A and brand-positioning clients
When clients with M&A ambitions ask about regulatory risk, Figma-Adobe is the most-cited recent example. Three things matter for thinking about deal-execution risk. First, the antitrust environment in 2022-2024 has shifted from a price-effects framework to one that gives meaningful weight to innovation effects and dynamic competition — the CMA’s analysis treated the elimination of a future-innovation threat as a sufficient basis for prohibition. Deals that would have closed under earlier doctrine are not closing under current doctrine. Second, the UK CMA has become the binding constraint for many global-software deals because its remedy authority is broad and its substantive standards have tightened. Third, the financial cost of a blocked deal is not just the break fee — the management distraction, the stranded strategy, and the competitive signaling all matter.
For brand-positioning clients the relevant lesson is what Figma did with the 15 months of regulatory limbo: Figma kept shipping product, kept hiring, and kept communicating publicly that the company was operating independently. By the time the deal failed, Figma’s strategic position was stronger than it had been in 2022, not weaker. Targets that go limp during prolonged regulatory review hurt themselves regardless of whether the deal closes. Figma’s post-termination valuation and tender offer suggest the regulatory delay did not damage the underlying business.
Frequently asked questions
Why was the deal blocked?
The UK CMA and the European Commission both raised antitrust concerns focused on horizontal competition (Adobe XD versus Figma) and innovation theories of harm (the merger would have eliminated Figma as the most credible future challenger to Adobe’s design-software franchise). The CMA’s indicated remedies effectively amounted to prohibition. Rather than fight a multi-jurisdiction prohibition order through appeals, Adobe and Figma jointly terminated.
Did Adobe really pay $1 billion for nothing?
In a narrow break-fee sense, yes — Adobe paid Figma a $1 billion termination fee under the merger agreement. The economic value is partially offset by Adobe’s preserved cash position (no $20 billion deal closed) and by the public clarification that Figma is now the visible enemy Adobe has to compete against directly. But $1 billion is a real cost and Adobe’s stock reaction reflected that.
What is Figma worth now?
A mid-2024 tender offer valued Figma at approximately $12.5 billion — below the $20 billion Adobe price but above Figma’s prior $10 billion private valuation. The valuation gap between the Adobe deal price and the tender price partly reflects deal-premium economics (Adobe was paying for strategic value to itself) and partly reflects market correction in private software valuations between 2022 and 2024.
Could Adobe try again later?
In theory, but the regulatory hurdle would be at least as high — and possibly higher — on a second attempt because the regulators’ views are now on record. A practical re-attempt would likely require either substantive change in antitrust doctrine, structural changes in either company that ease horizontal-competition concerns, or carved-out remedies. Most analysts treat the deal as permanently closed.
What is the broader lesson for software M&A?
Innovation theories of harm now have real teeth in UK and EU antitrust review. Deals that consolidate the leader in a category by the leader-of-the-prior-category — especially when the target is the most-credible future competitor — are likely to face prohibition risk regardless of current market-share metrics. Buyers need to model that risk into deal premiums and into the strategic alternative of competing rather than acquiring.
Sources & references
- Adobe Inc. Form 8-K, December 17, 2023 (SEC EDGAR) — Adobe’s 8-K announcing the mutual termination of the Figma merger agreement.
- Figma and Adobe are abandoning our proposed merger (Figma blog, December 18, 2023) — Figma’s public statement on the termination of the deal.
- Adobe and Figma call off $20 billion merger after regulatory scrutiny (CNBC) — CNBC’s coverage of the December 2023 termination.
- Termination of Adobe / Figma Merger (Gibson Dunn client alert) — Antitrust law-firm analysis of the regulatory process and termination.
- CMA Phase 2 referral, July 13, 2023 (UK Competition and Markets Authority) — The CMA’s case page including the Phase 2 referral decision and subsequent provisional findings.