After the Adobe deal fell through, Figma called employees from the company-wide PTO to the town hall – Fortune

Every year between Christmas and New Year, Figma gives all employees two weeks of vacation to enjoy the holidays. This year’s companywide PTO looked even brighter as many of the software company’s employees hoped regulators would approve creative giant Adobe’s $20 billion acquisition. But on Monday, Slack and email alerts alerted U.S. employees that the deal wasn’t going through. It appeared the companies failed to convince European Union lawmakers that a merger between Adobe and Figma would not amount to a monopoly on creativity software.

With just three hours’ notice, Figma called its 1,300 employees (known internally as “Figmates”) back from vacation to attend an impromptu optional town hall meeting to discuss the company’s future after the failed Adobe deal, Fortune has learned.

“’Hugs everywhere’ was one of the things management said,” a Figma employee, who wished to remain anonymous, told Fortune.

The town hall meeting, which lasted 60 minutes early Monday morning (Eastern Time), came after 15 months of talks between Figma, Adobe and regulators to reach an agreement to merge the creative companies. Figma CEO Dylan Field said the decision to cancel the merger was made “jointly” by the two design-focused companies. Now Adobe has to pay Figma a $1 billion breakup fee. (A Figma spokesperson said that this money would be used to accelerate impact as a team, but that it was too early to say exactly how it would be distributed.)

“Despite thousands of hours we have spent with regulators around the world detailing the differences between our companies, our products and the markets we serve, we no longer see a path to regulatory approval of the deal,” the Figma wrote. CEO in a letter published on the company blog, first shared with employees. “Figma’s best and most innovative days are still ahead of us.”

Since Adobe valued Figma at $20 billion and the company’s last valuation was $10 billion, the upside potential for almost every employee hired before the deal would have been significant. The gains for permanent employees could have been the difference between owning a home and renting, or private and public school for children – as some Figmates expected payouts of over 40% of their salary at closing, Fortune has learned.

“This is not the outcome we were hoping for and it is fair to say we are disappointed that regulators prevented the deal from closing,” the Figma spokesperson told Fortune. “But the last two days have shown even more clearly that our team is great and a big reason why we are so confident that Figma’s best days lie ahead.”

Employees at Slack were told everywhere that regulators were thwarting the deal. Employees shared articles through internal channels citing regulators’ problems with the merger for months. “We knew this was coming,” says the source.

Fortune’s source also points out that the inner mood combines casualness with resilience. “I don’t think there’s really much change… To me it just looks like it’s a delay; Figma is a very stable, strong company; We didn’t really need that.”

On paper the source is correct. Figma will end 2023 with annual recurring revenue of over $600 million, up more than 40% from last year, multiple publications report. This solidifies the San Francisco-based company as one of the leading late-stage private technology companies and could position it for an IPO by 2025 or later, The Information said.

While Figma employees may be scaling back plans for lavish vacations and home ownership after the merger collapses, in a shocking twist, Adobe shareholders are a little richer. Adobe shares have risen 4% since the deal was canceled, showing Wall Street’s aversion to acquisitions that drive up venture capitalists’ prices by huge percentages and billions of dollars.

Wall Street’s stance is shared by many Figma users, who have long valued the creative collaboration software as a simpler and cheaper alternative to Adobe’s offerings like Photoshop, InDesign, InCopy, etc. “This is fantastic news for everyone else in the world,” one designer wrote on X about the failed deal.

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