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> They announced the deal in Sept 2022, when the Nasdaq had already dropped significantly.

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.

Because the deal involved stocks and cash, the total value of the deal was likely agreed upon before but the actual amount of stock Adobe had to pay was likely dependent on the day of announcing it.

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.

But 20 billion is a huge amount, that's supposedly a 50 price to sales ratio if not more which is huge. Something like Snowflake which has an insane valuation is only half that...

Only way Adobe could justify this is that it kills a dangerous competitor, which is what EU legislation is supposed to stop..

>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.

Yes, but there is no way it would cost Adobe even close to $20 billion to develop an analogues product.

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.

>Yes, but there is no way it would cost Adobe even close to $20 billion to develop an analogues product.

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.

Because a 50 P/S ratio would be unusually high (I'm of course trying to say that IMHO Adobe is significantly overpaying)

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.

Adobe has a much larger reach in the target market. Under Adobe, Figma can potentially double or triple their sales, bringing that ratio to more reasonable levels.

(Of course Adobe’s ability to execute that is far from certain)

Elon has entered the room.

Your argument for adobe’s motivation seems to support anti-competitive practice that the EU might be concerned about.