Figma is one of the greatest success stories in the history of B2B software. It created and remade its category. It’s worth $18B today, and Adobe almost acquired them for … $20B.
But is hasn’t been 100% smooth sailing since the IPO. The stock is down 68% since its IPO peak, trading at a $18B valuation on $1.1B in ARR. That’s 17x revenue for a company growing 38% YoY with 131% NDR.
The tough part: Adobe offered to acquire Figma for $20 billion in September 2022. The deal collapsed due to regulatory concerns in September 2024. Today, Figma is worth… roughly $18 billion as a public company.
So Dylan Field and the Figma team said yes to a certain $20B, got block by antitrust, went through an initially euphoric IPO market, and then watched their stock crater 68%, and ended up at basically the same valuation. Even after incredible execution since the IPO.
Was it all worth it?
The Real Math: Not Actually $20B vs $20B
Here’s where the surface-level comparison falls apart completely. Let’s do the actual math that matters.
The Adobe deal was announced September 2022. If it had closed in early 2023 (before regulators killed it), shareholders would have had $20B in cash and Adobe stock for roughly 33 months by now. At a conservative 5% annual return, that’s worth approximately $22.4B today in time-value-adjusted dollars. At a more aggressive 8% return (reasonable for a diversified portfolio), you’re looking at $23.2B.
But there’s more. Figma issued significant equity grants between the Adobe deal announcement and IPO. Employee option pools, retention packages, executive compensation. A typical pre-IPO company will issue 5-10% additional equity in the 18-24 months before going public. Let’s be conservative and assume 7% dilution. And the company then sold another 6% in its IPO.
So the $18B market cap today doesn’t mean existing shareholders from the Adobe deal era own $18B. They own approximately $15B after dilution. Compared to the time-value-adjusted Adobe offer of $22.4B (at 5% returns), that’s a ~30% loss in real wealth. At 8% returns, it’s even higher.
The $1B Vest That Changed Everything
The detail that haunts this story: $1B in stock vested on IPO at around $115/share. That stock is now worth $35/share, a 70% decline. For employees who received $1M in vested shares, they’re looking at $340K today. The tax bill on that $1M vest? Still due, based on the IPO price.
Many employees likely sold 30-50% at IPO to cover taxes. So they got $400K cash, paid $300K+ in taxes, and held $600K in stock now worth $200K. Net outcome: $600K total from a $1M vest, with a $400K tax payment creating an effective net worth of $200K from what should have been life-changing money.
In the Adobe deal, that same $1M in equity would have vested as Adobe stock and cash, likely at a 50/50 split. That employee would have $500K cash (taxed at vest, netting ~$300K after taxes) plus $500K in Adobe stock that’s up approximately 8% since September 2022. Call it $540K in Adobe stock. Total: $840K net after taxes versus $200K net today.
This is the human cost of saying no to M&A. It’s not just about the founders’ decision-making. It’s about hundreds of employees who built the company, believed in the mission, and ended up significantly poorer because of factors entirely outside their control.
The Math That Makes You Think (If You Ignore Reality)
At $1.1B ARR growing 38% YoY, Figma will do roughly $1.5B ARR in 2026. If they maintain anything close to that growth rate, they’re looking at $2B+ ARR by 2027. At 17x revenue (their current multiple), that’s a $34B company. At a more modest 12x (still premium for a best-in-class SaaS company), that’s $24B.
But here’s the problem with this analysis: it assumes Figma maintains its current multiple. SaaS multiples compress as companies scale and growth slows. A company growing 38% at $1.1B ARR typically grows 25-30% at $2B ARR. And 25-30% growth rarely commands 17x revenue. More likely 10-12x.
So the realistic 2027 scenario: $2B ARR at 11x = $22B market cap. After another 5-7% dilution from ongoing equity grants, existing shareholders own about 93% of that, or $20.5B. Time-value adjusted back to 2022 dollars at 5% annually? That’s $17.7B in present value.
The Adobe deal would have paid $20B in cash and stock in 2023. Even without any investment returns, that’s still worth more than the realistic optimistic scenario for Figma in 2027.
When Saying No Makes Sense (And When It Doesn’t)
Now Figma did say Yes, their did was just blocked.
But this situation crystallizes a framework every founder should internalize. I wrote about this a few years ago when a founder asked about a “good but not great” acquisition offer, and the Figma situation proves the framework exactly.
Strong M&A offers are worth taking when:
- Your company has hit a local maximum, and the path to significantly more value requires navigating treacherous market conditions
- You’re not the clear category leader, and an acquirer can genuinely accelerate your trajectory
- The offer represents life-changing wealth and meaningful diversification for founders and early employees
- You’re pre-product-market fit or pre-$10M ARR, where the risk of failure is still high
- The strategic acquirer can 2-3x your growth rate through distribution, brand, or resources
Strong M&A offers are worth rejecting when:
- You’re the clear #1 in a massive market growing 50%+ annually
- The acquirer will constrain your product roadmap or market expansion in ways that destroy long-term value
- You have 18+ months of runway and strong unit economics that make future fundraising likely
- The valuation is less than 3x your realistic independent outcome in 3 years
- You’re post-$100M ARR with clear line of sight to $1B+ ARR where public market multiples will reward scale
Figma clearly believed they were in the second category. At $1.1B ARR in a market they’re dominating, with Adobe as the legacy incumbent, the strategic logic seemed sound. But they missed two critical factors:
First, they weren’t actually rejecting the Adobe deal by choice. Regulators killed it. So the decision framework doesn’t cleanly apply. They didn’t proactively say no; they were forced to proceed independently.
Second, they potentially underestimated how brutal the IPO market would be. Going public in 2024-2025 meant facing a market that had completely re-rated SaaS valuations. The 30-50x ARR multiples of 2021 were gone. Even best-in-class companies trade at 10-20x now.
The Private Markets Reality Check
Dev Ittycheria’s comment cuts deep: “Perhaps it’s not the public markets that are brutal, but the private markets that are out of touch with reality.”
This is the real story. Figma raised at a $10B valuation in 2021. Their final private round implied they were worth significantly more. The IPO priced them at what likely felt like a step down, and then the market said “still too high.”
The private markets in 2021-2022 were pricing SaaS companies for perfection. Every company growing 50%+ was “worth” 30-50x ARR because comparable public companies traded there. When the public markets corrected to 10-15x for even the best companies, private valuations were suddenly anchored to a reality that no longer existed.
Figma’s experience is now the cautionary tale. You raised at $10B on $400M ARR? Great. You’re doing $1.1B ARR? Awesome. The public markets might still value you at $19B, which is “only” a 1.9x markup on your last private round. After the dilution from IPO and subsequent grants, early investors might barely be up.
The lesson here: private market valuations in frothy times are opinions. Public market valuations are price discovery with billions of dollars voting. If there’s a 2-3 year gap between your last private round and your IPO, expect significant re-rating.
What This Means for Your M&A Decisions
If you’re sitting on an acquisition offer today, here’s the framework:
First, do the actual math. Not “$X offer versus $Y potential outcome.” Do “$X offer with time-value of money and certain liquidity versus $Y potential outcome minus dilution from future rounds/IPO/grants, discounted to present value, with probability weighting.”
Most founders miss the dilution part completely. From a Series C to IPO, you’ll typically see 15-25% total dilution from new investors, employee option pools, and executive comp packages. Your 10% ownership becomes 7.5-8.5% by the time you’re public. Factor that in.
Second, separate the valuation from the strategic fit. Adobe at $20B was both a premium valuation AND potentially a strategic disaster for Figma’s vision. If the acquirer will constrain your product roadmap, limit your market expansion, or integrate you into a legacy architecture, the price needs to be significantly higher to compensate for those limitations.
But here’s the nuance: most founders overestimate the strategic constraints and underestimate the strategic benefits. Instagram inside Facebook had access to infrastructure, AI resources, and distribution that accelerated their growth. WhatsApp maintained surprising independence while gaining Facebook’s security and scaling expertise. Don’t assume acquisition means death of vision; it often means acceleration of execution.
Third, model your realistic independent path. Not the venture-funded hockey stick. Not the “if everything goes right” scenario. The 50th percentile outcome where you execute well, grow consistently, but face normal market headwinds. What’s that path worth after dilution and in present-value terms? Is the M&A offer 1.5x that? 2x? Less?
For Figma, the realistic independent path was: go public in 2024, face a corrected market, trade at 15-20x ARR, grow into the valuation over 2-3 years. Present value of that path: roughly $18-20B after dilution. The Adobe offer: $20B certain, with time value making it worth $22-23B by now.
Fourth, consider your personal wealth concentration. If you’re a founder with $5M liquid and $50M in company stock, the M&A offer represents life-changing diversification. If you’re a founder with $50M liquid and $500M in company stock, you can afford to take more risk.
Dylan Field had already achieved significant liquidity from secondary sales. For him, the risk tolerance was much higher than for employees with 100% of their net worth tied up in Figma equity.
Fifth, evaluate market timing honestly. Figma rejected Adobe in mid-2024 (or rather, regulators did) thinking they could IPO into a recovered market. They did, but the reception was brutal. Could they have predicted that? Probably not with certainty, but the warning signs were clear: public SaaS multiples had compressed 50-70%, IPO windows were selective, and only the highest-quality companies were getting premium receptions.
The Broader Pattern
This happens more than people realize. Instagram sold to Facebook for $1B when they were growing exponentially and could have built a $100B+ independent company. WhatsApp sold for $19B when they could have been worth more independently. Both were “too early” exits that made founders and investors wealthy but left value on the table.
Conversely, Yahoo turned down Microsoft at $44B in 2008. Foursquare turned down multiple acquisition offers at $100M+ and eventually sold for parts. Snap rejected Facebook’s $3B offer and went public at $24B, then crashed, then recovered. These are the cautionary tales of saying no.
The difference? Market position, growth trajectory, and competitive dynamics. Instagram and WhatsApp were growing into massive markets with network effects and defensibility. Figma is doing the same. Yahoo and Foursquare were fighting existential competitive threats. Snap was fighting Facebook’s entire product copying machine.
But there’s a more important pattern: companies that sell “too early” typically do so at valuations that represent 10-30x revenue when they’re growing 100%+ annually. Instagram at $1B was ~50x their implied annual revenue run rate. WhatsApp at $19B was ~50x their revenue run rate.
Figma at $20B was ~20x their ARR while growing 38%. That’s not an early exit. That’s a full-price exit for a mature SaaS business. The Adobe offer wasn’t buying explosive growth potential; it was buying market leadership and defensive positioning against a competitive threat.
What I’d Tell Founders Today
The Figma situation teaches us something crucial: the decision to accept or reject M&A cannot be made purely on valuation multiples. But it also cannot be made purely on vision and strategic independence.
If you’re offered 15-20x ARR by a strategic acquirer and you’re growing 40%+, do the math on staying independent with brutal honesty. Factor in dilution, time value of money, probability of maintaining growth rates, and realistic public market multiples.
In most cases, you’ll find the certain M&A offer is worth more in present-value terms than the probabilistic independent outcome. The only times this isn’t true:
- You’re growing 60%+ annually and will clearly maintain 40%+ for 3+ years
- You’re pre-$50M ARR where the next 2-3 years of execution will 5-10x your value
- The strategic acquirer will genuinely constrain your market opportunity by 50%+
- You have strong conviction that public market multiples will expand significantly
For Figma, the honest assessment should have been: we’re a $1.1B ARR company growing 38% that will likely grow 25-30% annually as we scale toward $2B ARR. Public markets will value that at 10-15x ARR in 2027, meaning we’ll be worth $20-30B. After dilution and time-value discounting, that’s worth less in present-value terms than the certain $20B Adobe offer.
But here’s the part that matters most, and it comes back to the framework from that “good but not great” offer piece: if you’re going to say no to a strong M&A offer, you absolutely must use the period afterward to create separation and build more value. You can’t just execute the same plan at the same pace.
Figma needed to accelerate dramatically after rejecting Adobe (or after regulators killed the deal). They needed to expand into adjacent markets, introduce new products, and grow at 50%+ to justify the decision. Instead, they grew at a steady 38% and went public into a hostile market.
The hardest part? You won’t know if you made the right decision for 3-5 years. Figma is in the middle of that window right now. The stock is down 68%, but the company is still executing. They’re at the same valuation as the Adobe offer, but after dilution and time-value adjustments, existing shareholders are down 20-25% versus taking the deal.
Sometimes saying no is worth it. Sometimes it’s the most expensive decision you’ll ever make. The only way to know which is to understand your market, your position, your realistic growth trajectory, and your personal goals with brutal honesty.
And always, always do the real math. Not the headline numbers. The actual present-value, after-dilution, time-adjusted math that shows what shareholders really get.
Dylan Field made his choice (or had it made for him by regulators). Now we wait to see if independence was worth the pain. Based on the actual math today? It wasn’t. But ask again in 2027.
