Feb 10, 2024 - Business

Plaid, Figma and life after a failed M&A deal

Illustration collage of a handshake over background of hundred dollar bill and rectangles.

Illustration: Shoshana Gordon/Axios

IRobot recently announced major layoffs and the departure of CEO Colin Angle, following Amazon's failed takeover attempt.

Why it matters: Losing out on a lucrative merger can feel like a death knell, but sometimes it's a blessing in disguise.

Driving the news: This week, Plaid made some high-profile executive moves as it prepares for an eventual public offering.

The big picture: Over the last couple of years, a number of high-profile tech acquisitions have been terminated or unwound because of regulator antitrust concerns.

On the one hand, companies like Plaid and Figma have not been fazed — and even thrived.

  • While waiting for regulatory approval, Plaid concluded that it was selling itself short (literally) for only $5.3 billion. Months later, it raised new funding at a $13.5 billion valuation.
  • This week, the company named former Cloudflare product chief Jen Taylor as its first president, months after hiring Expedia's Eric Hart as its CFO. It's on pace for an eventual IPO.

Meanwhile, Figma hasn't rested on its laurels, either.

  • The company has continued to roll out new product features and build out AI capabilities, with CEO Dylan Field telling journalists last week that neither the merger nor its termination had changed Figma's product road map.
  • Strategic M&A could be on its horizon, Field added, as is the possibility to partner with Adobe in some fashion.
  • Still: About 4% of employees (52) have left the company since the merger's termination in return for three months' severance pay, Field said.
  • Employees are also expecting a tender offer soon, and the company has reset its internal valuation to $10 billion — half of what Adobe planned to pay, per the NYT.

Flashback: On the other hand, some companies got the short end of the stick.

  • Meta acquired Giphy in 2020 for about $400 million.
  • By the time regulators forced the social media network to sell it off, however, it fetched only $53 million from Shutterstock — suggesting its business may have lost real value while it remained in that regulatory review limbo.
  • Meanwhile, iRobot — which makes the Roomba vacuum robot — announced layoffs and the departure of its CEO of over three decades, as part of the news it's no longer selling to Amazon.

What they're saying: "It's very draining on senior leaders; there's a lot of loss of control that happens to you," explains Bain & Company partner Dale Stafford, who advises companies on navigating mergers.

  • "So what do we need to do to make sure we lock in senior leaders.… Thinking about the retention strategy on the back of this is very common," he says, adding that it's equally important if the deal does go through. Some folks just don't want to work for a large company.
  • "Until the deal closes, you're still an independent company.… You have to plan for a world where [the deal doesn't close]" as it pertains to products, expansion and so on, Stafford adds.

Between the lines: The range in success for companies raises questions about whether they needed to sell to begin with.

  • "When companies make 'flailing firm' arguments to us about how they need to merge to avoid going out of business, we scrutinize that very closely," FTC Chair Lina Khan told Axios' Sara Fischer yesterday (more from that below).
  • "There's a legal standard that these companies have to make in order to fully benefit from these arguments."

The bottom line: There can be life after a failed merger, but it'll come with some choppy waters.

Go deeper