The $1 billion cheque Adobe wrote for nothing.

On 15 September 2022, Adobe agreed to buy Figma — the browser-based design tool that had quietly become the default workspace of the world’s product teams — for roughly $20 billion in cash and stock. It was the largest acquisition Adobe had ever attempted, and the largest sum anyone had ever offered for a private software company.

Fifteen months later, the deal was dead. It was not voted down by shareholders and not undone by a financing collapse. It was stopped by competition regulators in London and Brussels. And on the day it ended, Adobe did something that looks, at first glance, indefensible: it wired Figma $1 billion for a company it would never own.

That billion-dollar payment is the most instructive part of the whole episode. It was not a surprise, not a punishment, and not a sign that Adobe had been careless. It was written into the contract from the very first day — a number both sides agreed on long before anyone knew whether the deal would succeed. Understanding why is the point of this breakdown.

01 Why Adobe wanted Figma

There are really only two reasons a company spends $20 billion on another. One is to grow — to buy a capability, a market or a technology it does not have. The other is to defend — to remove something that has become dangerous. Adobe’s bid for Figma was mostly the second kind, and that is the key to the price.

Adobe has owned digital design for thirty years. Photoshop, Illustrator and the rest of Creative Cloud are the tools a generation of designers learned on. But those products were built on an old assumption: that a design is a file, opened by one person, saved, and sent on. Figma was built on a different assumption entirely — that a design is a living document, open in a browser, edited by many people at once, shared with a link rather than an attachment.

That single idea made Figma the standard. Product teams at companies as large as Microsoft, Airbnb and Uber ran their design work inside it. Adobe had a competing product, Adobe XD — and by 2021 XD was visibly losing. So when Adobe offered $20 billion, it was not buying a tool it lacked the talent to build. It was buying the company that was beating it, before that company could grow into a genuine threat to Creative Cloud itself.

The price reflected that urgency. Twenty billion dollars was double Figma’s most recent private valuation and roughly forty-five times its annual revenue — an extraordinary multiple for a software company. Adobe’s own shareholders flinched: the stock fell about 17% on the announcement. Investors could see what Adobe was paying for. The open question was whether regulators would let it.

02 The wall

Most acquisitions join two things that fit together — a company buys a supplier, or a product that slots neatly beside its own. Economists call that a vertical or complementary deal, and regulators usually wave it through, because nothing that competed before competes any less afterwards.

Adobe–Figma was the other kind. Both companies sold design software; in places, they sold the same design software. A merger between two direct rivals is called horizontal, and it triggers the single question competition regulators care about most: if these two become one, does the customer lose a choice that was keeping prices down and products sharp?

Two regulators decided the answer was yes. The UK’s Competition and Markets Authority and the European Commission both ran in-depth investigations, and both reached the same conclusion — that combining Adobe and Figma would meaningfully reduce competition in product design software, and in the vector and raster editing tools beneath it. Adobe argued the concern was overblown, pointing out that its own XD was a fading product. The regulators were unmoved.

What truly killed the deal was not the objection itself but the remedy. Regulators did not ask Adobe for promises about future behaviour. They wanted a structural fix — and the structural fix on the table was for Adobe to divest Figma Design, the core product, the very thing it was buying. A deal you can complete only by giving up what you came for is not a deal. In the companies’ own words, there was “no clear path” forward.

03 The billion-dollar clause

Now back to that $1 billion. When two companies sign a merger agreement, both know it might never close — and antitrust is one of the most common reasons it does not. Rather than leave that risk hanging, sophisticated deals price it directly into the contract through a reverse termination fee: a fixed sum the buyer agrees to pay the seller if the deal collapses for specified reasons, regulatory rejection chief among them.

Adobe’s $1 billion was exactly that. It was not a penalty for failure and not a sign of bad faith. It was the agreed cost of the regulatory risk Adobe chose to carry — and, just as importantly, compensation to Figma for everything a failed deal takes. For fifteen months Figma had lived in suspension: unable to raise money on its own terms, unable to plan fully as an independent company, its staff and strategy frozen around a sale that then evaporated. The fee paid for that lost time.

It is worth being precise about what a reverse termination fee does and does not cover, because the previous deal in this series — Elon Musk’s purchase of Twitter — taught the mirror-image lesson. There, a breakup fee did not let the buyer walk away; it covered only narrow failures, and a change of heart was not one of them. A reverse termination fee points the same way: it protects the seller against the buyer’s risks — financing, antitrust — but it almost never lets a buyer leave simply because the deal no longer looks attractive. The direction of the fee tells you whose risk the contract was built to absorb.

04 The aftermath

Figma took the billion dollars, stayed independent, and kept building. In July 2025 it went public on the New York Stock Exchange. The shares were priced at $33, valuing the company at roughly $19 billion — almost precisely what Adobe had agreed to pay three years earlier.

Then the market opened. Figma’s stock more than tripled on its first day of trading, closing near $115 and valuing the company at around $60 billion — the largest first-day jump in decades for a company raising that much. The business Adobe had tried to buy for $20 billion, been forbidden to buy, and paid $1 billion to walk away from, was now worth roughly three times Adobe’s offer — and Adobe owned none of it.

Seen against that, the breakup fee — the number that looked like the embarrassing loss — turns out to be the smallest figure in the story. The real cost to Adobe was strategic: it spent fifteen months and a billion dollars and ended exactly where it started, still facing the competitor it had hoped to absorb, now larger, public and impossible to buy.

That is the lesson this deal leaves behind. A signed merger agreement is not a certainty; it is a probability, exposed to regulators who increasingly say no. And the reverse termination fee is the rare place where that probability is written down in plain dollars — a number that tells you, before anyone knows the outcome, exactly how much risk each side believed it was taking on.

This article is an educational breakdown for TheSpreadline and is not investment advice. Figures reflect publicly reported terms at the time of the deal.