In the current environment, money-losing software companies aren’t exactly hot. The valuation from an IPO would be extremely disappointing for investors compared to the $20 billion Adobe is paying. A price/sales multiple of 10x would be generous, and that would be a $5B valuation.
Adobe's actually done investors a favour and made a realistic enterprise valuation of the company for everyone. If it's worth $20bn to them then it's not likely to float for $5bn. They clearly think there's value there or some kind of competitive advantage that makes the company worth that much.
The problem is that the company is worth $20 billion only to Adobe.
And that explains why antitrust authorities around the world are interested in this deal: that kind of discrepancy suggests a market distortion in progress.
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Figma has about $500M annual revenue, AFAICT.
In the current environment, money-losing software companies aren’t exactly hot. The valuation from an IPO would be extremely disappointing for investors compared to the $20 billion Adobe is paying. A price/sales multiple of 10x would be generous, and that would be a $5B valuation.
Adobe's actually done investors a favour and made a realistic enterprise valuation of the company for everyone. If it's worth $20bn to them then it's not likely to float for $5bn. They clearly think there's value there or some kind of competitive advantage that makes the company worth that much.
The problem is that the company is worth $20 billion only to Adobe.
And that explains why antitrust authorities around the world are interested in this deal: that kind of discrepancy suggests a market distortion in progress.
XD proved that Adobe doesn’t really care about the UX/UI design sector - Figma’s worth 20bn to Adobe to kneecap a potentially existential threat.
What about Adobe's competitors? It's not going to be worth that much less to them either
Which competitors? I can’t think of anybody but Adobe who would pay a premium for Figma.
It doesn’t fit in Autodesk’s portfolio, and their acquisition activity tends to be frugal.