They would much rather just pay the $1 billion breakup fee and forget about that 2 years when all of tech got a little "loose" than be forced to go ahead with such an expensive mistake.
Best case scenario it will take Adobe nearly a decade to grow into that valuation with their figma product.
And even thats really pushing it.
Figma, if they put their minds to it could kill photoshop and illustrator within 2 years, and After Effects/Premier within 5.
Even given 5 years Adobe's current talent wont be able to build Figma, we know this already from Adobe XD and every other failed new app attempt.
It's been evident for a while that almost no one at Adobe understands how their apps work anymore, every feature update just ads welcome screens (written in HTML) or slower new document screens (written in HTML). The only recent update to the AE UI outside of welcome screens, the timeline reskinning is completely broken.
It was true for Elon trying to back out of Twitter's acquisition because tech valuations dropped significantly during the closing period. But this is Adobe and they didn't buy Figma for the memes nor did they roll out of bed thinking they should buy Figma that day like Elon probably did.
I think Adobe bought Figma thinking that they might have acquired Instagram. Today, Meta would be in a lot of trouble if they didn't own Instagram. Figma could have developed a suite of tools via their cloud-native stack and competed with Adobe across all of their products eventually. Basically, I think Adobe bought out their long-term competitive threat.
Quite frankly, at 9% of Adobe's total market cap, it's not that bad of a deal.
The price was likely locked, at least in significant part, well before this date. There would have been diligence happening for months prior to this, to finalize the numbers. But the large pieces would have been in place well before September.
It would have been possible for Adobe to walk away from whatever promises (likely not legally binding) they had made, but this would have hurt their reputation as an acquirer. Potential acquisition targets are already wary enough of a nonbinding LOI; if Adobe had turned its back after signing an LOI with Figma, that would not soon be forgotten by VCs, startups, and their lawyers.
So the higher the Adobe stock when the deal announced, the less Adobe had to pay.
From April 2022 to September 2022, Adobe's stock was fairly stable (relatively). So I'm not sure if I buy this argument.
Only way Adobe could justify this is that it kills a dangerous competitor, which is what EU legislation is supposed to stop..
I mean, that's exactly what my post above is saying. Figma has inherent tech advantages via their cloud-native stack. You can use the tools anywhere there is a browser. It's significantly more intuitive and easier to collaborate with multiple people. Their applications can eventually be accelerated server side such as GPU-farm acceleration for AI features. Figma is also building a community for sharing work, like the Github of design.
There's nothing really stopping Figma from creating a competitor to Adobe Cloud Suite including Photoshop, Illustrator, Acrobat, and InDesign.
Well you said:
> This means Adobe might actually have to pay a little bit more for Figma if they acquired them now.
Which is very unlikely in the current market if they were a public company.
This, I'm not familiar with. However, I will say that time to market is important too. By the time Adobe can come up with a cloud-native competitor to Figma, Figma might have come up with a cloud-native competitors to Photoshop and Illustrator.
>Which is very unlikely in the current market if they were a public company.
Why not? Nasdaq is 13% higher today than in September 2022 when they announced the deal. Adobe itself is 25% higher now. Arguably, tech valuations have stabilized and increasing again.
Figma is a private company, of course it depends on figures as well which are not publicly available but no comparable public companies are valued that high after the 2021 peak.
However unlike most comparable tech companies it is supposedly profitable (not clear if GAAP, though) which would increase it's valuation.
(Of course Adobe’s ability to execute that is far from certain)
Also it protects their position. If somebody else would bundle some decent graphics tools with Figma, that might have created a competitor for Creative Cloud.