On Monday, Adobe and Figma mutually called off the transaction, saying they no longer see a path toward regulatory approval of the deal. The companies had spent 15 months working on the combination, which called for Adobe to buy Figma, a cloud-based designer platform, for $20 billion.

Gregg Moskowitz, senior enterprise software analyst at Mizuho Securities, said he was surprised by the timing of the announcement. As recently as last week, Adobe CEO Shantanu Narayen, on its fourth quarter earnings call, said the company remained excited about the strategic opportunity with Figma, according to a Dec. 13 transcript. “It was our expectation that ADBE was going to fight for this asset well into the new year,” Moskowitz wrote in a Dec. 18 research note.

Adobe has thrived since it announced the Figma acquisition in September 2022. Adobe’s product portfolio has been “infused with recent innovation,” Moskowitz said in the note. He pointed at Firefly, which allows users to create high quality images using generative AI, and Adobe Express, a graphic design tool that lets users make social posts, TikToks, and reels. Both products were produced by Adobe internally. (Adobe launched Firefly in March and relaunched Adobe Express in 2021.)

Adobe did not return messages for comment. 

Since it agreed to buy Figma, Adobe’s stock had soared 89% to $584.68, its closing price on the Friday before the companies abandoned the deal. (Adobe’s stock is up 2% this week.) Calling off the transaction also frees up about $10 billion in cash, some or all of which could be used for an additional stock buyback, Moskowitz said in the note.

“Thanks to innovations we’ve seen over the last year, Adobe is in a far better competitive position, with much better growth prospects, than what existed 12 to 15 months ago,” Moskowitz told Fortune.

Figma provides creative collaboration software that is a simpler and cheaper alternative to Adobe’s offerings like Photoshop, InDesign, and InCopy, Fortune reported. The company has also grown since September 2022. Figma has added 500 people, or “figmates” and currently employs about 1300 people, a spokesman said. It has opened hubs in London and Singapore, launched new products like DevMode, a Figma workspace, and also acquired Diagram, an AI-design startup, in June. 

Figma will finish 2023 with over $600 million in annual recurring revenue, a 40%-plus increase year over year, according to multiple publications. The Figma acquisition was expected to give Adobe a boost in browser-based design and collaboration over the long-term, Moskowitz wrote. Now that the deal is off, both companies said they would find ways to partner.  

“Clearly, [Figma] will have to proceed with plan B now that they are going to remain independent,” Moskowitz said. Figma has strong technology and assets that are valuable, he said.

At $20 billion, PE will probably not bid for Figma, banking and PE sources said. The startup was also valued at an expensive $10 billion in 2021. “The chance of finding another buyer is small,” one PE executive said. “There are not any buyers that can get near that price,” said another banker. 

A strategic, say someone like Microsoft, could hypothetically come in and buy Figma. But MSFT is busy, having just closed its $69 billion buy of Activision Blizzard in October. Microsoft faced resistance from British and American regulators, needing 22 months to complete its buy of the video game-maker, Fortune reported.

Figma has raised $333.4 million in funding, according to Crunchbase. Some of the biggest names in VC backed Figma, including Kleiner Perkins, Sequoia and Index Ventures. The company is widely expected to go public, probably in 2025. When asked about a possible IPO, a spokesman said: “We’re focused on building in 2024.” The company is also receiving a $1 billion breakup fee.

“Going forward, we expect Figma will continue to do very well, even though it remains to be seen if this failed transaction has had (or will have) an impact on Figma’s growth and execution,” Moskowitz said in the note.

Shake It Off: Blackstone’s holiday video, inspired by Taylor Swift, is a success for the alternative asset manager, having racked up 600,000 views as of Friday. One of my favorite parts was discovering that Jonathan Gray, Blackstone’s president and COO, is a fan, maybe not a Swiftie, but Gray definitely admires the musician. Swift is “an amazing talent, what an amazing artist. I do love a bunch of her songs,” Gray told Fortune. Find out how the Blackstone holiday video came together and who came up with the idea here.

Talk to you tomorrow,

Luisa Beltran
Twitter: @LuisaRBeltran
Email: luisa.beltran@fortune.com
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Joe Abrams curated the deals section of today’s newsletter.

VENTURE DEALS

- GreyOrange, a Roswell, Ga.-based robotic automation platform for fulfillment and warehouse operations, raised $135 million in Series D funding. Anthelion Capital led the round and was joined by existing investors Mithril, 3State Ventures, and Blume Ventures. 

- Podimo, a Copenhagen, Denmark-based podcast and audiobook subscription service, raised €44 million ($48.1 million) in funding from The Danish Export and Investment Fund, HighlandX, and Augustinus Fabrikker.

- PaintJet, a Nashville, Tenn.-based company integrating robotics and AI into the commercial painting process, raised $10 million in Series A funding. Outsiders Fund led the round and was joined by 53 Stations, Dynamo, Pathbreaker Ventures, MetaProp, and VSC Ventures.

- Backer, a San Francisco-based platform designed to connect parents with the best 529 savings plan for their children, raised $9.5 million in Series A funding from WndrCo.

- Salt Labs, a New York City-based loyalty rewards platform for hourly workers, raised $8 million in funding from Third Prime. 

- Standard Biocarbon, a Portland, Maine-based producer of biochar, a form of charcoal that can capture carbon, raised $5 million in funding from Nexus Development Capital.

- Claim, a Boston, Mass.-based social media platform that connects users by their favorite brands, raised $4 million in seed funding. Sequoia Capital led the round and was joined by Susa Ventures, BoxGroup, and others.

PRIVATE EQUITY

- ECI Software Solutions, backed by Leonard Green & Partners acquired Treetop Group, a Veenendaal, Netherlands-based provider of business software for the residential construction and craft industries. Financial terms were not disclosed. 

- Hildred Capital Management acquired Hello Bello, a Pacific Palisades, Calif.-based brand of baby and family care products. Financial terms were not disclosed. 

- NDH Advisors, backed by Unity Partners, acquired Stratus Group, a Leawood, Kan.-based provider of tax and outsourced accounting services. Financial terms were not disclosed. 

- NEORIS, backed by Advent International, acquired ForeFront, a Fair Haven, N.J.-based cloud consulting and implementation services provider. Financial terms were not disclosed. 

- Ruppert Landscape, backed by Knox Lane, acquired Tree Amigos Outdoor Services, a Fleming Island, Fla.-based provider of landscaping services. Financial terms were not disclosed. 

- Tilia HOLDINGS recapitalized Ever Fresh Fruit Company, a Boring, Ore.-based provider of formulated fruit and flavor ingredient solutions. Financial terms were not disclosed. 

- Traliant, backed by PSG, acquired Kantola Training Solutions, a San Francisco, Calif.-based harassment and diversity training platform for employees. Financial terms were not disclosed.

EXITS

- Aon agreed to acquire NFP, a New York City-based insurance broker and provider of financial services, from Madison Dearborn Partners and HPS Investment Partners for $13.4 billion.

FUNDS + FUNDS OF FUNDS

- Rally Ventures, a Menlo Park, Calif. and Minneapolis, Minn.-based venture capital firm, raised $240 million for its fifth fund focused on AI & machine learning, cybersecurity, fintech, and software as a service companies.

PEOPLE

- WndrCo, a Redwood City, Calif.-based venture capital firm, promoted Justin Wexler to principal.