Adobe acquired Figma for 20 Billion Dollars but why Adobe paid a huge price during the recession?
To put this in perspective, following are some acquisition cost of major companies:
- GitHub for $7.8B by Microsoft in 2018
- RedHat for $34B by IBM in 2019
- Xilinx for $49B by AMD in 2021
- Mandiant for $5.4B by Google in 2022
Why Adobe acquired Figma?
To avoid the mistake that Yahoo did while pricing Google back in 2002.
Figma is currently the fastest-growing UX tool and the customers love it.
Figma's market share is double of Adobe XD in collaborative design and prototyping and soon were taking away their customers as well.
Recently, Figma killed the InVision tool which was a leading UX tool 4 years back. InVision had to layoff 400 employees including the cofounder just 2 months back.
Adobe has been slow in innovating and bringing new features while the UX & creator industry is growing at rocket speed.
Adobe had no choice but to acquire it at whatever price Figma asks for to stay relevant in the market until they could afford it.
When Yahoo rejected Google, Yahoo's value was $125 Billion in 2002. Today, its worth is only $4 Billion.
Today, Adobe's valuation is $174 Billion and it's still a smart move to acquire Figma at $20 Billion.
The conclusion is that even if you are the biggest player in the game, you should admit when you lose a small battle with a small player. Bring the small player in your team till time lasts and pay more than it deserves.
This is the battle for the long run. Keep improving is the key but no matter who you are, there might be someone who understands the market better and can capture a small section.