Figma and Adobe failed Merger

Figma and Adobe have abandoned their $20 billion proposed merger. The failure to close the deal was due to regulatory hurdles in Europe and the United Kingdom.

The Competition and Markets Authority (CMA) provisionally determined the deal would harm the product design software market. As Adobe would have too much control. I personally believe this is a bad move by regulators as the design software market has a few players that are of equal size such as Canvas which as recently valued at $40 billion. Abode has a market cap of over $200 billion.

The deal's collapse means that Adobe must now fork out $1 billion to Figma for a reverse termination fee. This highlighting the growing influence of regulatory bodies on tech mergers and acquisitions.

Regulators make M&A decisions by considering the viewpoint of a buyer. There are two ways this unfolds: 1) Consolidation of market power → Less competition → Higher prices for customers (and less innovation over time). 2) Integration of complementary technologies → Enhanced product offerings → More value for customers

It wasn't clear how the proposed Figma/Adobe merger would have led to an enhanced product offering for customers by the regulators. Some people are of the viewpoint that the merger of the top two most-used design tools would limit competition.