Adobe recently announced its acquisition of Figma for a staggering $20 billion, split evenly between cash and stock. This deal doubles Figma's valuation and represents a 50x multiple on their reported $400 million in annual revenue. Many are questioning the logic behind such a high price tag, even considering the value of Figma's talented workforce.

As an Adobe employee, I have no insider information on the decision to acquire Figma. However, as a designer who doesn't use Adobe XD daily, I have some thoughts on the matter.

Adobe has long been a leader in native software, dominating various verticals since the 1990s. From raster graphics with Photoshop to photo editing in Lightroom, Adobe's suite has been a staple for designers. UX design traditionally happened in Illustrator and Photoshop, but these tools were never ideal for UX designers. After acquiring Macromedia, Adobe discontinued Fireworks, leaving designers to revert to Photoshop or Illustrator.

The design landscape has evolved significantly, with Figma emerging as a cross-platform, collaborative tool that fills a gap Adobe has struggled to address. Figma's dominance in this segment is undeniable, and Adobe's acquisition can be seen as a strategic move to capture this market.

Wall Street analysts largely agree that the $20 billion price tag seems excessive, suggesting Adobe overpaid by at least 100%. However, the strategic rationale may lie in preventing competitors like Microsoft or Google from acquiring Figma and integrating it into their ecosystems.

This acquisition offers Adobe an opportunity to reinvent itself. The company has faced criticism for its subscription model, which many view as predatory. By integrating Figma, Adobe can reshape its image and potentially revitalize its product offerings.

One underreported aspect of this acquisition is the potential synergy between Figma's team and Adobe's ongoing projects, such as Photoshop Web and Adobe Express. By leveraging Figma's expertise in web-based, collaborative design tools, Adobe could transition its traditional desktop software to more modern, web-based platforms.

While the acquisition might seem like a simple expansion of Adobe's design software dominance, it could represent a transformative moment for the company. If managed correctly, this could lead to a rebirth of Adobe, much like an inverse of the Lockheed Martin and Boeing scenario. By integrating Figma's culture and innovation, Adobe could add significant value beyond the $20 billion investment.