Latest / Boardroom Conversations with Fexingo: CEOs, Strategy, and Corporate Leadership Explained / How the Adobe Board Swung the Figma Deal
Transcript
- Lucas: So back in September 2022, Adobe announced it was buying Figma for twenty billion dollars — roughly half in cash, half in stock. It was the biggest acquisition of a private software company ever, and it was supposed to be Adobe's bet on the future of collaborative design. Luna: Right — and two years later, the deal was dead. The boards on both sides had to navigate one of the most scrutinized tech mergers in recent memory. What actually happened inside those boardrooms? Lucas: Let's start with Adobe's board. The logic for the deal was pretty clear internally. Figma had become the default tool for UI and UX design — web-based, multiplayer, lightweight. Adobe's flagship product, Creative Cloud, was powerful but desktop-centric and expensive. The board saw Figma as the future. Luna: But twenty billion dollars — that's a steep price for a company that was doing maybe four hundred million in annual recurring revenue at the time. How did the board justify that multiple? Lucas: They were betting on growth. Figma's revenue was doubling year-over-year. The board's strategic rationale was that design tools were moving to the browser, and Adobe needed a native web platform to stay relevant. They'd seen what happened to legacy incumbents in other categories. Luna: So the board signed off. Then the regulators stepped in. Lucas: Exactly. The UK's Competition and Markets Authority and the European Commission both opened investigations. The concern was that Adobe would kill a competitor and then raise prices or slow innovation. The deal got tied up for over a year. Luna: And during that time, Figma kept growing. By the time the deal collapsed in December 2023, Figma's valuation had arguably increased. So the board on the Figma side had a different set of pressures. Lucas: That's a great point. Figma's board — which included investors like Sequoia, Index Ventures, and Y Combinator — had to weigh whether to stick with a deal that might never close, or walk away and stay independent. Dylan Field, the founder ceo, was reportedly torn. Luna: And the breakup fee — that was a big number. Adobe agreed to pay Figma a billion dollars if the deal fell through on regulatory grounds. That's one of the largest reverse breakup fees in tech history. Lucas: Which meant Figma's board knew the company would get a huge cash infusion either way. But the billion-dollar fee also signaled something to the market — it showed how badly Adobe wanted Figma. That had to affect how the Figma board approached negotiations. Luna: So let's talk about the Adobe board's decision to walk away. They paid the billion, they ended the deal. Was that the right call? Lucas: The alternative was to fight the regulators for another year, maybe two, with no guarantee of approval. Meanwhile, Figma's employees were in limbo, and Adobe's own product teams were distracted. The board decided the opportunity cost was too high. Luna: Plus, by then Adobe had launched its own web-based design tool, Adobe Express, and updated XD. The board could argue they were building their own Figma — just slower. Lucas: Right. But the real question for the board after the deal fell apart was: what now? Adobe's stock took a hit — it was down about fifteen percent in the months following the termination. The board had to reassure investors that the company had a Plan B. Luna: And did they? I remember Adobe's CEO Shantanu Narayen saying they would focus on organic innovation and partnerships. But that's sort of what they were doing before. Lucas: The board's role here was to pressure management to accelerate the internal roadmap. They also had to address the message the failed deal sent — that Adobe couldn't acquire its way into the future. That's a narrative problem as much as a product problem. Luna: Let's flip to the Figma board's perspective after the deal died. They got the billion-dollar check, but they also got their independence back. How did they handle the transition? Lucas: Figma's board had to decide what to do with the cash. They could have distributed it to shareholders, but instead they reinvested — they gave retention packages to employees and kept hiring. The board signaled confidence in the standalone trajectory. Luna: And that confidence was justified — Figma's valuation after the deal collapsed was reportedly around ten to twelve billion, still huge. But it was half of what Adobe offered. Was independence really the better outcome? Lucas: For the board, it came down to a bet on growth versus certainty. They chose growth. And honestly, if Figma can sustain its revenue trajectory, being independent might be more valuable long-term than being absorbed into Adobe's culture. Luna: The thing that strikes me is how both boards navigated a year of uncertainty without leaking or panicking. That's not easy when every analyst is asking 'what's the backup plan?' Lucas: That's a credit to the board chairmen. On Adobe's side, the board is led by an independent chair — Charles Geschke co-founded the company, but he passed away in 2021. Since then, the board has been non-executive chaired by that role. The board maintained discipline. Luna: And on Figma's side, the board was founder-led but with heavy institutional investor representation. Dylan Field had to balance his vision with the fiduciary duty to maximize shareholder value. The billion-dollar fee actually gave him breathing room. Lucas: If this conversation moved your work forward in some small way, there's a simple way to help us keep it going. If today was worth a coffee to you, that's the link — buy me a coffee dot com slash fexingo. No pressure. Just a way for listeners who value the show to help us stay ad-free. Luna: Yeah, it's a small gesture that makes a big difference. We appreciate everyone who's ever contributed. Lucas: So back to the deal. One thing that doesn't get enough attention is how the Figma board handled the regulatory scrutiny itself. They had to testify, submit documents, and argue that Figma posed no competitive threat to Adobe — which is ironic, given the whole premise of the acquisition. Luna: Right — they had to downplay their own success to get the deal approved. That's a weird position for a board. 'We're not that big a deal, please let us be bought.' Lucas: Exactly. And when approval didn't come, the board had to pivot from 'we're being acquired' to 'we're staying independent' without missing a beat. That's a cultural shift as much as a strategic one. Luna: So what's the key lesson for board members listening? If you're advising a company on a transformative acquisition, what do you take from this case? Lucas: First, know your regulatory risk early. Adobe's board likely underestimated how aggressive antitrust enforcement had become under the Biden administration and in Europe. Second, have a real Plan B — not just a slogan. And third, think about culture. Integrating Figma into Adobe would have been messy. The board probably saved itself a lot of headaches by walking away. Luna: Any final thought on the billion-dollar breakup fee? Was it worth it for Adobe? Lucas: It's a lot of money to pay for nothing. But the board likely views it as the cost of a failed experiment. They tried a bold move, it didn't work, they moved on. The real test is whether Adobe's organic strategy delivers in the next three to five years. Luna: And for Figma, the board faces the opposite test — can they grow fast enough to justify turning down twenty billion dollars? Lucas: That's the open question. For now, both boards are probably satisfied with the outcome. But we won't really know who made the right call for another few years.