Why European startups fail to get acquired

Startup Feature
The $20Bn Acquisition Blocked By Europe

The $20 billion acquisition of Figma by Adobe was supposed to be one of the biggest tech deals of the decade. For Figma, it was the kind of exit most startups only dream of. For Adobe, it was a strategic move to own the next generation of design tools.

But after over a year of regulatory review, the two companies walked away and the deal collapsed in late 2023. It was not internal disagreements or changing markets that caused it. It was blocked by European regulators.

The decision has sent a message that even large acquisitions, once seen as the most reliable path to exit, are no longer guaranteed.

Why the Figma Deal Fell Apart

Founded in 2012, Figma quickly became a major force in collaborative design software. It introduced a browser-based model, real-time editing, and an intuitive interface that gained popularity across product teams. By the time of the acquisition announcement, Figma had millions of users and was projected to pass four hundred million dollars in annual revenue.

Adobe saw the deal as strategic. Figma had outpaced its own design tools among younger users and startups. Bringing Figma into its product family would have removed its most direct competitor while giving Adobe new relevance among modern design teams.

But regulators in Europe raised concerns. The European Commission argued that eliminating Figma as an independent player would reduce future competition in the design software space. The concern was not just about today’s market, but about what would be lost over the next decade if one player dominated too early.

Because both companies had significant user bases and customers across Europe, the transaction was subject to European competition rules. After months of investigation, it became clear the deal would not be approved.

Adobe walked away and paid Figma a one billion dollar termination fee.

What It Means for European Startup M&A

The collapse of the deal is being seen as a turning point for tech mergers with European exposure. It underscores how the rules around consolidation have shifted and how Europe’s regulatory bodies now carry real global influence.

In the United States, mergers often face scrutiny only when companies are in the same vertical or already overlapping in their offerings. But European regulators are increasingly looking at future market dynamics, not just present-day impact. The Figma decision shows that Europe is willing to intervene earlier to protect competition.

This has implications for founders and investors across Europe. For startups, the once straightforward path of being acquired by a US tech giant may now face higher risk and lower certainty. For venture funds, it creates more urgency to invest in startups that can stand on their own and reach sustainable scale.