Yesterday, the 15th September 2022, Adobe Inc announced the acquisition of Figma, its biggest rival in digital design for a sum of $20 billion. 

Driving the news 
Adobe is buying out Figma in a half cash and half stock deal which would give Adobe, the maker of Photoshop, ownership of a company whose products allow creators to bypass the often-clumsy process of saving and sending to colleagues using a collection of disparate apps. 

  • Figma, with its web-based platform, is widely popular in digital design, among tech firms including Google, Netflix Inc., Twitter Inc., Zoom Video Communications (ZM.O), Airbnb Inc. and Coinbase (COIN.O).

What they are saying 
Adobe Chief Executive Officer Shantanu Narayen, who hailed Figma as “the future of work” stated that the acquisition would provide collaborators with efficient tools including document reader Acrobat and online whiteboard Figjam. 

  • He added that “this partnership will give Figma users access to Adobe’s photography, illustration, and video technology, all in one place. And Figma, in return, can offer its deep expertise in building in the browser.”

What you should know 
Adobe investors were less impressed with the acquisition which dragged the company’s stocks by 17% on Thursday. Reports say that the investors understand the rationale behind acquiring one of Adobe’s biggest rivals. But claim the cost of the purchase was overpriced. 

Figma’s annual recurring revenue (ARR) stands at $400 million, a tiny fraction compared to Adobe’s $14 billion. Hence, it was unreasonable for Adobe to pay the equivalent of 11% of its market value for 2.8% more ARR.

Before the acquisition of Figma, the highest amount Adobe had paid for a company was that of a software maker, Marketo, for $4.75 billion in 2018.

What to expect 
There would be a tremendous change in using Figma following the incorporation of Adobe’s area of expertise, including imaging, photography, illustration, 3D, and font technology. 

Figma would continue to improve its product, such as Figma Design, FigJam, and the Figma community platform. “The Friends of Figma program will continue to grow into new communities.” 

There is also no sign that Figma’s pricing would change for now.

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