> Adobe makes $17B a year in revenue, they would need some pretty strong growth out of Figma to justify the price tag especially after valuations came down.
That's not it works.
1. Adobe is at $19B in revenue
2. Adobe's market cap is $272B and just shy of its ATH.
3. Acquisitions, especially at this level, are usually paid with debt and equity, not just cash.
4. The proposed acquisition smells of both one for value (e.g. we buy you and we add $20B to our market cap...ok thats not exactly how it works, but that's the general ide) and one for defense (protect our existing market cap).
5. You have no idea what Figma's revenue and growth rates our (speculation says $400M rev). If you borrow at 10% interest to acquire the biz and the company is growing their profit annually at 20%, then Adobe can still net out in the long run. (again, not that simple, but illustrative is the point)
Could Adobe have overpaid given the timing? Absolutely.
Could Adobe have realized this and when it came time to go through anti-trust they just threw the b-team lawyers at it? Totally plausible.
> And if it was regulatory, then shouldn't those agencies come out and say "We blocked this, no go."
Not necessarily. Behind closed doors, they might have said "during our reviews with regulators we've been advised that the fight with regulators would be too risky and costly if we didn't succeed"
There are multiple factors that could sour this deal from a financial standpoint. ARR multiples have been falling, interest rates have risen, and Adobe's performance has been quite strong without Figma.
Meanwhile, from what I've observed, Figma is approaching 100% market penetration among designers, so they will need to look beyond their core to sell things like Figjam to "normal" people. With full access to financials, Adobe may have seen the growth curve tapering off much sooner than expected. Just a hunch.
That's not it works.
1. Adobe is at $19B in revenue
2. Adobe's market cap is $272B and just shy of its ATH.
3. Acquisitions, especially at this level, are usually paid with debt and equity, not just cash.
4. The proposed acquisition smells of both one for value (e.g. we buy you and we add $20B to our market cap...ok thats not exactly how it works, but that's the general ide) and one for defense (protect our existing market cap).
5. You have no idea what Figma's revenue and growth rates our (speculation says $400M rev). If you borrow at 10% interest to acquire the biz and the company is growing their profit annually at 20%, then Adobe can still net out in the long run. (again, not that simple, but illustrative is the point)
Could Adobe have overpaid given the timing? Absolutely.
Could Adobe have realized this and when it came time to go through anti-trust they just threw the b-team lawyers at it? Totally plausible.
> And if it was regulatory, then shouldn't those agencies come out and say "We blocked this, no go."
Not necessarily. Behind closed doors, they might have said "during our reviews with regulators we've been advised that the fight with regulators would be too risky and costly if we didn't succeed"