Hamburg-based Xing AG, operator of the leading business network in German-speaking countries, hit the acquisition trail for the second time this month, when it acquired Munich-based, global expat network InterNations.org for around €10 million ($11.4 million U.S.). (Xing’s news release here.)
The final purchase price may be higher. The parties agreed Xing will make earn-out payments of between €8 million and €20 million in 2020, depending on how successful InterNations was in reaching ambitious, pre-set operating targets by then.
InterNations will continue as a separate site and business. It was not immediately clear how Xing and InterNations will exploit synergies and to what extent this was a move by Xing to break out of its “German-speaking-region only” straitjacket.
“Xing enhanced its position by adding an international specialist for local, offline networking,” said Xing’s CEO Thomas Vollmoeller. “Xing connects people, not profiles … because personal encounters are indispensable, even in our digital age. In InterNations we now have a real specialist for local offline networking on board.”
InterNations, which was founded in 2007, has more than 2.7 million members across 390 cities worldwide (Xing has 12 million registered members in Germany, Austria, and Switzerland) and offers expats a variety of ways to connect with each other. Members can help each other find a place to live, deal with the authorities and help them understand cultural and social mores in their new country.
Offline events are particularly popular, with around 50,000 such events held worldwide last year, which were attended by 1.5 million people.
“Xing will focus on the German-speaking market of around 100 million people, but that doesn’t mean we can’t take on additional projects elsewhere,” Marc-Sven Kopka, Xing’s vice president of external affairs, told the AIM Group. (We assume, this means Xing may latch on to InterNations in selected countries outside the German-speaking region – editor.)
“What is striking about InterNations, is that it has both a strong online and offline network. We want to strengthen our competence in real-life networking, and this acquisition will help us to do that,” he said.
InterNations currently employs more than 100 people from 30 countries. Founders Malte Zeeck and Philipp von Plato will remain with the company and continue to manage the business, which is profitable with double-digit revenue growth. Next year, InterNations aims to achieve revenue in the “low double-digit million” range.
Income is derived from advertising and user memberships at €8.95 per month for three months in advance, €6.95 per month for six months, and €5.95 per month for 12 months.
The InterNations platform includes, what one may call, a basic, free stuff site: members can list and look for jobs, accommodation, and stuff – all at no cost. Paying members can message one another in the site.
It has been a busy month for Xing. Earlier this month, the group acquired Prescreen GmbH, provider of the Prescreen candidate management system, for €17 million. At the time, Kopka told the AIM Group his firm was “always looking for reasonable acquisitions”.
“If it’s cheaper to buy than to build, that’s what we’ll do, especially if a company has great growth potential. It’s not a question of price. We are permanently scanning the market,” he said.
The acquisition of Prescreen enables Xing to tap into the rapidly expanding market for candidate and talent management systems. The purchase price for Prescreen may rise by between €5 million and €10 million, due to earn-out payments to be made in 2020, the size of which will depend on how close the company came to ambitious operating targets pre-set for that year. So, in essence, the same condition as Xing agreed with InterNations.
Around eight years ago, Xing tried to build a global network, Kopka said, before deciding five years ago to concentrate on being “a regionally-focused network”. “Business networking tends to be local,” he added. “We’ve embraced that as our USP.” (As said above, Xing might have stepped off that USP when it made InterNations a subsidiary – editor.)
Xing helps its 12 million members to balance their professional and private lives within an environment defined by a lack of skilled workers, digitalization and changing values.