Adobe recently announced that it has entered into a definitive merger agreement to acquire the leading web-first collaborative design platform, Figma. Adobe will acquire Figma for approximately $20 billion in cash and stock. Together, the companies will usher in a new era of collaborative creativity.
Adobe is working to change the world through digital experiences. Adobe’s tools and platforms are important for the digital economy. The company has a long history of making innovative products. Adobe’s Photoshop revolutionized imaging and creative expression. It also created PDFs, which let people share documents electronically. And now it has created the digital marketing category with the Adobe Experience Cloud.
Figma was founded in 2012 with the mission to help teams collaborate visually and make design accessible to all. It pioneered product design on the web. At present, it enables anyone designing interactive mobile and web applications to collaborate through multi-player workflows, sophisticated design systems, and a rich, extensible developer ecosystem. Figma is popular with a new generation of millions of designers and developers and has a loyal student following.
“Adobe’s greatness has been rooted in our ability to create new categories and deliver cutting-edge technologies through organic innovation and inorganic acquisitions,” said Shantanu Narayen, chairman, and CEO, Adobe. “The combination of Adobe and Figma is transformational and will accelerate our vision for collaborative creativity.”
Figma’s market is expected to reach $16.5 billion by 2025. The company expects to add approximately $200 million in net new annual recurring revenue (ARR) this year, surpassing $400 million in total ARR exiting 2022, with net dollar retention of more than 150%. With gross margins of about 90% and positive operating cash flows, Figma has built an efficient, high-growth business.
What can users expect from the Adobe – Figma deal?
Adobe and Figma will together change the future of creativity and productivity. They can accelerate creativity on the web, advance product design and inspire communities of creators, designers, and developers across the globe. The combined company will have a lot of opportunities to grow quickly and help customers, shareholders, and the industry.
New future of creativity and productivity
Adobe and Figma enable individuals and teams to be more creative and productive. With their expansive product portfolio, the combined company will be able to power the future of work by bringing capabilities for brainstorming, sharing, creativity, and collaboration together and delivering these innovations to millions of customers.
Accelerated creativity on the web
Creators are currently challenged with making a lot of content in close collaboration with many stakeholders. The web has made it easier for teams to work together and create things. Figma’s web-based, multi-player capabilities help speed up the delivery of Adobe’s Creative Cloud technologies on the web. This makes the creative process more productive and accessible for more people.
Advancements in product design
Adobe and Figma will benefit all people involved in the product design process. This will include designers, product managers, and developers. This is achieved by bringing powerful capabilities from Adobe’s imaging, photography, illustration, video, 3D, and font technology into the Figma platform.
Empowerment of the designer and developer community
Adobe’s vibrant creative community is the force behind the company’s continuous innovation. Figma’s passionate community develops and shares everything from tutorials to templates to plug-ins with their large and growing ecosystem. By combining Adobe’s and Figma’s communities, designers and developers get together to unlock the future of collaborative design.
“Figma has built a phenomenal product design platform on the web,” said David Wadhwani, President of Adobe’s Digital Media business. “We look forward to partnering with their incredible team and vibrant community to accelerate our joint mission to reimagine the future of creativity and productivity.”
“With Adobe’s amazing innovation and expertise, especially in 3D, video, vector, imaging, and fonts, we can further reimagine end-to-end product design in the browser, while building new tools and spaces to empower customers to design products faster and more easily,” said Dylan Field, co-founder, and CEO, Figma.
Adobe – Figma transaction details
Under the definitive agreement, Adobe will acquire Figma for approximately $20 billion in approximately half cash and half stock, subject to customary adjustments. Figma’s CEO and employees will receive approximately 6 million additional restricted stock units that will vest over four years after closing. Adobe expects to finance the cash consideration with cash on hand and, if necessary, a term loan. The transaction will close in 2023, subject to the receipt of required regulatory clearances and approvals. The other closing conditions to be satisfied include the approval of Figma’s stockholders.
When the transaction closes, Dylan Field will continue to lead the Figma team, reporting to David Wadhwani, president of Adobe’s Digital Media business. Until the transaction closes, the companies will continue to operate independently.
Allen & Company LLC is the financial advisor to Adobe and Wachtell, Lipton, Rosen & Katz act as legal advisors in connection with the transaction.
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