What Adobe's Failed Figma Deal Tells Us About CMA Scrutiny in 2026

On 18 December 2023, Adobe walked away from its $20 billion acquisition of Figma. Adobe paid Figma $1 billion in break fees and went home. It was the second time in 18 months a major US software acquisition had been killed in Europe, after the CMA blocked Microsoft's Activision deal earlier the same year (Microsoft restructured and got it through; Adobe didn't bother).

For UK founders, the Figma deal was a watershed. It taught a generation of operators that a UK competition regulator they'd barely heard of could materially affect what their company was worth, who could buy it, and on what terms.

Two years on, the regime has moved. The CMA has a new chair appointed by a Labour government to reset the relationship with the tech sector. The Department for Business and Trade has consulted on overhauling the competition regime. Microsoft and Amazon have given commitments on cloud egress fees rather than face market investigation references. The mood music is different.

So what does selling to a US strategic actually look like in 2026? And what do you, as a UK founder thinking about exit, need to know?

What actually killed the Figma deal

Adobe announced the acquisition of Figma in September 2022 at a $20 billion valuation, half cash, half stock. The strategic logic was clear. Figma had built the dominant collaborative design tool. Adobe owned Photoshop, Illustrator and the rest of Creative Cloud. Combining the two would have been the largest software acquisition in history.

The deal sailed through US review. The Department of Justice investigated, threatened to sue, but never filed. The decisive blockers were European.

The European Commission opened an in-depth investigation in August 2023, signalling concerns about overlapping markets in interactive product design. The CMA followed with its own Phase 2 reference in November. Both regulators were focused on the same theory of harm: Adobe was buying its closest emerging competitor, and the merger would eliminate a constraint that was forcing Adobe to innovate.

Adobe's general counsel, Dana Rao, later explained the company's decision to walk: there was “no clear path” to approval in either jurisdiction without divestments that would destroy the value of the acquisition. Adobe could have offered to sell Figma's nascent Photoshop competitor, but Figma's strategic value to Adobe was precisely the products that overlapped. There was nothing left to carve out.

This is the crucial pattern, and it is the pattern that distinguishes Figma from Microsoft-Activision. Microsoft was buying content (games) that lived next to a platform it already owned. Microsoft could carve out cloud streaming rights, hand them to Ubisoft and keep the deal. Adobe was buying a direct horizontal competitor. Carving out the overlap would mean carving out the deal itself.

What the CMA actually looks at

The CMA reviews mergers under a substantial lessening of competition (SLC) test. In practice, three things drive a deal into Phase 2 (and Phase 2 is where deals die):

Horizontal overlap. If your business and the buyer compete in the same market, even thinly, the CMA will look hard. Adobe-Figma was a horizontal merger.

Vertical integration into a platform. If the buyer owns a distribution channel and you provide critical inputs, the CMA looks at whether the buyer could foreclose competitors post-deal. This was the Microsoft-Activision concern.

Loss of a dynamic constraint on a dominant player. Even if the overlap today is small, if you are the most credible emerging threat to an incumbent, the CMA may treat the merger as eliminating future competition. This is increasingly the theory of harm in tech reviews.

One other thing matters: jurisdiction. The CMA can review any deal that meets either a turnover threshold (£70 million UK turnover for the target) or a share-of-supply threshold (the parties together supply 25% or more of any reasonable market and the merger increases that share). The share-of-supply test is broad and discretionary, and the CMA has used it to assert jurisdiction over deals where neither party had material UK turnover. UK founders selling to a US strategic should assume the CMA can review the deal if it wants to.

How the regime has shifted in 2025-26

The regulatory environment that killed Adobe-Figma is not the regulatory environment of today. Three shifts matter.

A new chair, with a brief to be more pro-growth. In January 2025 the CMA's chair was replaced. Doug Gurr, a former Amazon UK executive, was appointed interim chair. The political signal was unambiguous. The Treasury wanted a regulator that supported growth and inward investment, not one that built a reputation on blocking US tech deals. Gurr's appointment was followed through the year by a series of speeches from the CMA's leadership emphasising pace, predictability, proportionality and process.

DBT consultation on the competition regime. In late 2025 and early 2026, the Department for Business and Trade ran a public consultation on refining the UK competition regime. The themes: faster timetables, clearer jurisdictional thresholds, more proportionate remedies, and earlier engagement between merger parties and the CMA. The CMA itself responded supportively in March 2026. Reform is now a question of timing, not direction.

Voluntary commitments instead of market investigations. The CMA spent three years investigating UK cloud services, with hyperscalers in the frame. In 2026 it concluded the investigation by accepting voluntary commitments from Microsoft and Amazon on egress fees and interoperability rather than imposing a formal market investigation reference. That is a significant shift in posture. Negotiated outcomes are now preferred to adversarial ones.

For UK founders, the practical effect is: the bar for a Phase 2 reference is now meaningfully higher than it was in 2023. The bar for a block, having gone through Phase 2, is also higher. But the threshold question of jurisdiction (whether the CMA can review at all) hasn't moved.

What UK founders selling to US strategics need to know

Five practical points, in order of how much they affect your deal.

If you're selling to a horizontal competitor, expect scrutiny. The CMA will look at any deal where buyer and seller occupy adjacent or overlapping markets. The bigger the buyer's market share and the more credible you are as a competitor, the more risk there is. This is true even after the regime softens. A US software giant buying a UK SaaS challenger remains the highest-risk transaction profile.

For most UK founders, the CMA isn't actually the issue. The vast majority of mid-market deals (under £100 million) sit comfortably below the formal turnover threshold and are not interesting to the CMA on a share-of-supply basis. If your buyer is a platform giant and you are dominant in a niche they care about, scrutiny is plausible. If your buyer is a private equity firm or a non-overlapping strategic, scrutiny is unlikely.

Negotiate regulatory risk into the SPA. If your buyer is large enough that CMA review is plausible, the deal terms must allocate the regulatory risk explicitly. Reverse break fee. Long-stop date. Hell-or-high-water clause requiring the buyer to offer remedies to clear the deal. Walk-away rights for the seller if the deal is held up beyond a certain date. These provisions decide who bears the cost when a regulator gets curious. Founders almost always negotiate them too lightly.

Engage the CMA early, not late. Both the CMA and DBT have signalled a preference for pre-notification engagement. If your deal is plausibly reviewable, your buyer's competition counsel should be in dialogue with the CMA before announcement. Surprises are punished. Predictability is rewarded.

The strategic value of being acquirable matters more than ever. The Adobe-Figma chill briefly suppressed valuations on UK tech assets that looked like horizontal acquisition targets for US giants. The 2026 reset has partially restored that, but the buyer pool for the very largest deals is still narrower than it was in 2021. If you are positioning your business as a strategic asset, think now about which buyers can credibly close a deal in the current regime, and structure your business to be attractive to two or three of them.

The Figma irony

Figma raised at $12.5 billion in May 2024, six months after the Adobe deal collapsed. By the time Figma went public on the New York Stock Exchange in mid-2025, it priced at a market cap well above Adobe's original $20 billion. Figma's shareholders, including the venture investors who had been ready to take Adobe's cheque, ended up better off because the deal failed.

That outcome doesn't happen to most blocked deals. Figma was a category-defining business with a path to public markets and an alternative buyer pool deep enough to reset the price. Most companies don't have that optionality. When their strategic deal dies in regulatory review, what they get is a year of distraction, a depressed share price, an exhausted founder, and a much weaker negotiating position with the next buyer.

The lesson isn't that regulatory review is fine. The lesson is that founders selling into a regulated environment need to understand the risk before they shake hands, structure the deal to absorb the risk, and pick a buyer who has credibly thought through the route to clearance.

What to do this week if you're thinking about a US sale

• Map the plausible US strategic buyers for your business. For each, ask: do we overlap horizontally? Are we a credible competitor to a product they sell?
• If yes to either, pre-test the deal with a competition silk (1-2 hours, £1,500 well spent). Get an honest read on CMA exposure.
• When you brief your sale-side adviser, ask them explicitly which UK and EU regulators would have jurisdiction over each plausible buyer. The answer should be specific, not waved away.
• Build the regulatory risk allocation into your LOI template before you start the process. Reverse break fees, long-stops and walk-away rights are negotiated harder before signing than after.

The CMA isn't the obstacle most UK founders worry about; integration, retention and earnouts will affect more deals more than competition review will. But for the deal that gets caught, the cost is total. Adobe paid a billion dollars to walk away from Figma. The shareholders, the management team and the lawyers all lived through a year of distraction. The job is to know whether you're the deal at risk, and to price the risk in before anyone signs.

– Adam