Adobe completes a massive $20 billion acquisition of its largest rival.

One of Adobe's key rivals in the field of digital design, Figma, has revealed that it would be purchased by the company for an astounding $20 billion.

According to Adobe, the deal will be split equally between cash and shares, with the CEO and staff of Figma receiving 6 million additional restricted shares that would vest over the course of four years after the anticipated conclusion of the transaction in 2023.

The agreement's completion is still pending regulatory clearances, other conditions, and the consent of the Figma stockholders.

Additionally, Figma's primary product line offers design and prototyping in a contemporary cloud-based environment, which has aided it in gaining over 4 million users to date. Adobe, on the other hand, is a design innovator as well and has been buying up companies in the worldwide digital market.

Investors have grown increasingly doubtful about the potential increase of sales for Adobe's design-related goods, which are increasingly viewed as being complicated, pricey, and out-of-date. Adobe's once-undisputed supremacy has been challenged by newcomers like Figma, Lightricks Ltd., and Canva Inc. that provide services that are more geared toward consumers. Since 2015, the creator of Photoshop has relied on acquisitions to boost sales by an estimated 20% annually, to an estimated $17 billion. However, the majority of these acquisitions have been in new or related industries, such as marketing, e-commerce, and analytics.

The ability to create new categories and offer cutting-edge inventive solutions, according to Adobe CEO Shantanu Narayen, is what makes his firm successful. He also claimed that the acquisition is a game-changing step that will strengthen their goal for integrated creativity.

On the other hand, according to Dylan Field, co-founder and CEO of Figma, Adobe's skills and creativity in 3D, video, vector, image, and typefaces will be used to recreate end-to-end product creation in the design browser while developing new tools to give users more control.

Remember that Figma was valued at $10 billion in June 2021 when it raised $200 million, and Adobe not only got rid of its main opponent but also bought a rapidly expanding company.

According to Adobe, the addressable market for Figma will be $16.5 billion by 2025. It is anticipated that this year's net annual recurring revenue (ARR) addition will be in the neighbourhood of $200 million, and that after 2022, the total ARR will exceed $400 million with a net dollar retention rate of more than 150 percent. With 90 percent gross margins and positive operating cash, the company has created a very scalable business.

Figma failure

Following the announcement of the deal, the shares fell 17%, driving Adobe's valuation to levels last seen in April 2020 and making it the S&P 500's worst-performing firm for the day.

based in San Francisco Dylan Field and Evan Wallace established Figma roughly ten years ago. According to Adobe and Figma, the business "pioneered product creation on the web" by allowing consumers to participate on software as they develop it. In recent years, Figma's clientele has grown beyond software developers at large corporations like Airbnb Inc. and Google, Alphabet Inc., to those who create presentations, games, and maps, particularly for mobile devices. Additionally, it has garnered a devoted student following.