Adobe's attempted acquisition of Figma

The deal in one paragraph

On September 15, 2022, Adobe agreed to buy Figma, the browser based collaborative design tool that had become the default surface for product teams to design interfaces together, for approximately $20bn in cash and stock, its largest acquisition ever.

Fifteen months later, on December 18, 2023, Adobe and Figma mutually terminated the agreement after concluding there was no realistic path to clear antitrust review in the EU and the UK. Adobe paid Figma a $1bn reverse termination fee for walking away.

Figma spent the next year and a half building on its own, and in July 2025 it went public on the NYSE at a price that, by the end of its first trading day, valued the company well above what Adobe had once offered for the whole thing.

Why Adobe wanted Figma

Adobe's core business is Creative Cloud: Photoshop, Illustrator, InDesign, tools built for a world where one designer worked alone in a desktop application and handed a finished file downstream. Figma had built something structurally different, a real time, multiplayer, browser native design tool where an entire product team, designers, engineers, and product managers, could work inside the same file at once.

That was not a feature Adobe could bolt onto Illustrator. It was a different architecture and a different way of working that had become the default at most software companies building consumer and enterprise products.

By 2022, Figma was not a scrappy startup nipping at Adobe's heels, it was the standard. Adobe had tried to compete with its own product, Adobe XD, and had not caught up. Buying Figma solved two problems at once: it removed the one competitor with a real claim on the future of product design software, and it gave Adobe a foothold in a cloud native workflow the rest of its portfolio had not reached.

Eliminating your most credible competitive threat while buying capability you could not build fast enough yourself is exactly the kind of deal antitrust regulators scrutinize hardest, and it is why this one ran into trouble.

Structure and terms

The transaction was valued at approximately $20bn, split roughly half cash and half Adobe stock, subject to customary adjustments.

Adobe expected to fund the cash portion from balance sheet cash and, if needed, a term loan, so there was no external financing contingency threatening the deal. On top of the headline consideration, Adobe agreed to grant roughly 6 million restricted stock units to Figma's CEO, Dylan Field, and to Figma employees, vesting over four years after closing, structured to retain the team through and beyond integration rather than let a payday trigger an exodus.

Allen & Company advised Adobe; Qatalyst Partners, the boutique bank built around large technology sale processes, advised Figma. The merger agreement also included the piece that matters most here: a $1bn reverse termination fee payable by Adobe to Figma if the deal failed to close, principally if it failed to obtain antitrust clearance within an outside date roughly 18 months from signing.

A reverse termination fee runs opposite an ordinary breakup fee: an ordinary fee is paid by the seller to the buyer if the seller walks for a better offer, while a reverse fee is paid by the buyer to the seller if the buyer cannot close, most commonly because regulators block it.

That fee was what let Figma's board sign up to an eighteen month regulatory gauntlet at all: if it failed, Figma was not just returning to the status quo, it was being paid $1bn for the wasted year and the momentum a fight like this can cost a target.

The regulatory walk: why the EU and UK said no

Two regulators independently reached the same conclusion, using slightly different evidence.

Both regulators zeroed in on the same product category: interactive design software, where Figma had become dominant and Adobe was one of the few credible players still investing to catch up. The EU also flagged a foreclosure risk, that Adobe could bundle Figma with Creative Cloud in a way that made it harder for any future rival design tool to gain distribution.

The UK's concern was sharper still: Figma's own market share was already so large that removing Adobe as an outside challenger was itself the harm. Both regulators considered whether a partial remedy, such as a divestiture of some overlapping product, could fix the problem, and concluded it could not.

Figma's design tool was not a side business Adobe could carve out and sell off, it was the entire asset being purchased, which is why this deal could not be rescued the way other large tech mergers have been saved with a licensing commitment or a divestiture. When the antitrust concern is the target itself, there is no remedy short of not doing the deal.

How it played out (the termination, the fee, and Figma's 2025 IPO)

By late 2023, Adobe and Figma had spent over a year responding to information requests and formal objections on two continents. On December 18, 2023, the two companies terminated the merger agreement, saying there was no clear path to the necessary approvals. Within days, Adobe paid Figma the full $1bn reverse termination fee.

Figma kept building, kept growing revenue, and began preparing for an IPO. In July 2025, Figma priced its offering at $33 a share, above a range already raised once from an initial $25 to $28, implying a valuation just under $20bn at the offer price, close to what Adobe had once offered for the whole company. The stock did not stay there.

Figma opened trading on the NYSE on July 31, 2025, under the ticker FIG, at $85 a share and closed its first day near $115.50, a gain of roughly 250%, reportedly the largest first-day pop for a billion-dollar-plus US IPO in decades. By the close, Figma's market cap sat near $70bn, more than three times the value Adobe had agreed to pay in 2022.

If it comes up in your interview

Here is a 60 to 90 second answer you could give out loud: "Adobe agreed to buy Figma for about $20bn in September 2022, roughly half cash and half stock, to acquire the collaborative design tool that had become the default for product teams and to close the gap between its own tools and how the industry actually worked by then.

The deal died in December 2023 after both the European Commission and the UK's CMA independently concluded that combining the two dominant players in interactive product design software would eliminate the competition driving innovation in that category, and that there was no partial remedy that could fix it, since Figma's design tool was the whole asset, not a side business Adobe could sell off.

Adobe paid Figma a $1bn reverse termination fee, which is the mechanism that let Figma's board agree to an eighteen month regulatory process in the first place: if the deal failed on regulatory grounds, Figma got paid for the risk.

Figma then went public in July 2025, priced at a valuation close to the old $20bn deal price, and its stock nearly tripled the company's implied market cap by the end of its first trading day. In hindsight, Figma was probably right to bet on staying independent."

Likely follow ups:

"Why couldn't Adobe just offer a remedy, the way other tech mergers have gotten cleared?" Because the antitrust concern here was the target itself, not one overlapping line inside a larger acquirer. In deals that get saved, the buyer can divest or license the specific overlapping piece and keep the rest of the target. Adobe could not divest "some of Figma" and still complete the acquisition it was trying to make; the overlap was the entire deal.

"What is a reverse termination fee and why does it matter here?" It is a fee the buyer pays the seller if the buyer fails to close, most often because it cannot get regulatory approval. It allocates the risk of a deal not closing for reasons outside either company's control. Without it, Figma's shareholders would have absorbed fifteen months of distraction and opportunity cost for nothing if regulators killed the deal.

"Was $20bn a fair price looking back?" It looks conservative. Figma's first-day close after its 2025 IPO put its market cap at roughly three times the old deal value. That does not prove Adobe underpaid in 2022, an IPO day pop reflects scarcity and demand as much as fundamental value, but it does mean the original price was not obviously excessive.

"Did the termination actually hurt either company?" Adobe lost $1bn and eighteen months of focus, and still faces Figma as an independent, better capitalized competitor. Figma lost nothing financially, gained a large cash cushion, and used the extra time to grow into a business the public markets valued well above what Adobe had offered.

What this deal teaches

The lasting lesson is that a reverse termination fee is not boilerplate, it is a price on regulatory risk, negotiated by two parties who disagree about how likely a deal is to close. A target's board that accepts a lower fee, or none at all, is telling you it believes the deal will close easily.

A fee sized at roughly 5% of deal value, as this one was, tells you both sides recognized closing was genuinely uncertain, and the seller wanted to be compensated for taking that risk rather than staying independent and growing on its own.

When you get a question about deal structure, remember that termination fee provisions are where the two sides actually negotiate who bears the cost if the world does not cooperate.

And when a deal involves buying the single clearest competitive threat to your own business, expect regulators to ask the hardest version of that question: what happens to competition in this market if the deal closes, and can any remedy short of blocking it actually fix that.