September the 12th, 2023 – The Croatian Infinum company has recently acquired the American ExpandTheRoom (ETR) agency, and is now planning for growth of around 20 percent.
As Josipa Ban/Poslovni Dnevnik writes, the Croatian Infinum IT company recently acquired the American IT company ExpandTheRoom (ETR). By purchasing a creative digital agency based in New York, Infinum is now embarking on a stronger “conquest” of the extremely competitive American market.
“By acquiring ETR, we’re going to be gaining experience and knowledge of the US market, which should bring us more projects and clients as we go forward. Although we’re already present on that market and generate 20% of our revenue there, this purchase will strengthen our overall position,” said Nikola Kapraljević, CEO of Infinum, at the press conference where the acquisition was announced. Its amount hasn’t yet been publicly disclosed.
The EBRD helped with over 10 million euros
All that has been publicly said so far is that the acquisition was partly financed by a loan that Infinum received from the European Bank for Reconstruction and Development (totalling 10.8 million euros), and partly by its own cash.
The second acquisition that the Croatian Infinum company, which deals with design and software development, made in less than two years is certainly a good sign for the entire domestic IT sector. Croatian companies acquiring foreign companies, especially those from across the pond in the USA, is a rare phenomenon in the Croatian IT industry. We’re mostly witnessing exits and much stronger foreign players buying up small Croatian enterprises.
However, Infinum, which is celebrating the coming of age of its business this year, has other plans. When he assumed the role of CEO back in March 2022, Kapraljević announced that his goal was to increase the company’s revenues to 100 million euros in the next five years. In addition to organic growth, the plan was to achieve ambitious numbers through various acquisitions.
Getting clients on the American West Coast isn’t easy…
They realised the first back in December 2021 when they bought 3D Development from Macedonia, and now that trend has only continued with the acquisition of the American ETR. Kapraljević said that it is extremely important to Infinum because unlike in Western Europe and the East Coast of the USA, gaining clients on the West Coast represents a far “bigger challenge”.
ETR is otherwise a small digital agency, founded back in 2002, which currently employs 24 people. Although small in size, ETR has respectable clients such as Reuters, Citibank, ESPN, Business Insider, Honda, and even the gigantic Coca-Cola.
“We didn’t plan to be acquired by a Croatian company,” said James Cole, ETR’s executive director and co-founder (along with his friend Todd Doyle). That said, they couldn’t resist the offer made by the Croatian Infinum company and are convinced that they will gain value through this business move.
“When I met Nikola Kapraljević a year and a half ago, I was very impressed by him, as well as by what his team achieved with Infinum. On top of that, we have a common business culture and the same attitude towards our employees”, Cole explained, recalling finding common ground with Infinum.
A Croatian acquisition leading to a win-win for both sides
For the next year, Kapraljević explained, the ETR brand will remain as it is, after which they will decide whether to continue operating as Infinum. He also added that the number of employees in the US should soon increase. This purchase, which was worked on for a year and a half, should be a win-win situation for both companies on each side of the pond, and most of all, says Cole, for their clients.
Together, that is, consolidated, the companies should achieve 29 million euros in revenue by the end of the year and see impressive growth of 20%. It’s also worth noting that the Croatian Infinum enterprise ended last year with 23.2 million euros in revenue and growth of 24%.
As the company grows, Kapraljević pointed out, it’s more difficult to maintain such high growth rates. That’s why they started making these acquisitions, and they don’t plan on stopping with this American one. “We plan to work on growing organically, as well as expanding through acquisitions,” said the CEO of the company, which currently has eight offices in seven countries.
AI offers growth opportunities of its own
Existing clients of both ETR and Infinum (including the likes of Porsche, Philips, KPMG, and Warner Brothers) can be sure that the combined forces of these two companies will facilitate the process of the digital transformation for all of them, the CEOs assured.
“With the introduction of technologies such as artificial intelligence, the need for the digital transformation will only increase further. We’re currently entering a new era and we can see firsthand that brands are looking for additional expertise to adapt to new circumstances. With these trends in mind, Infinum and ETR are strategically joining forces to better lead and guide global clients through the challenges they’re going to face in the future,” explained Cole.
In addition, as Kapraljević pointed out, certain forecasts indicate that the global IT services market should grow at an average annual rate of 7.37% until the year 2028. With the development of artificial intelligence, the Internet of Things (IoT) and other digital products and tools, there’s a lot of room for growth.
