The Adobe-Figma Breakup And Its Impact On Startup M&A


Adobe’s decision to abandon its $20 billion acquisition of Figma due to regulatory concerns in the EU and the United Kingdom has raised concerns about the future of startup mergers and acquisitions (M&A). This development has sparked worries about the potential impact of stricter competition rules imposed by governments on startup exits.

Key Takeaway

The decision by Adobe to abandon its acquisition of Figma has raised concerns about the impact of regulatory scrutiny on startup exits, but the majority of startup M&A deals are not comparable to the Figma or Plaid situations.

Regulatory Worries and Their Impact

Venture capitalists and founders have expressed apprehension about startup exits following the cancellation of Visa’s $5.6 billion acquisition of Plaid in 2020 due to regulatory challenges. The appointment of Lina Khan, a prominent figure in antitrust research, as the chairperson of the Federal Trade Commission in 2021 further fueled concerns about the regulatory environment.

While the Adobe-Figma breakup adds to a series of instances where startups have been affected by antitrust and competition regulations, there is a growing fear that significant startup acquisitions may become unfeasible. Some VCs have even suggested that large startup acquisitions could be taken off the table.

Reality of Startup M&A

Despite the prevailing sentiment, an analysis of startup M&A data suggests that the concerns may be exaggerated. The majority of startup deals differ significantly from the Figma or Plaid cases, indicating that the current discourse may be more alarmist than reflective of the overall startup exit market.

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