Darlington-based White Digital, which provides website development and digital marketing services, grew with the acquisition of a web design company.
The company turned to Design365, which has bases in Gateshead and Newton Aycliffe.
The agreement will secure the future of Design365 and its four employees, following the retirement of director Alan Foster and his wife and business partner Anne Foster.
The two companies will merge under the White Digital brand, bringing the number of employees to 22.
Alan Foster will remain involved on a short term basis to assist with the transition period.
Douglas Dinwiddie, Managing Director of White Digital, said: “I was introduced to Alan by a mutual business associate and after the initial introduction we met and a discussion took place about the future of Design365.
“This is the latest in a series of acquisitions we’ve made over the past few years, and it has added a range of different skills to our development department, as well as capabilities in software like Magento, so we can now offer more options, especially on the e-commerce side.
“We also kept the team, as their clients were served by their staff, so logically we wanted to keep that, even if we are not going to take the premises from Design365 as they do not meet our needs.”
He added: “The takeover gives us more stability and a larger customer base, full of customers who we know we can add a lot of value to.
“It also provides income stability, which means we can continue to grow our team – we’ve found that there’s actually a lot more work and opportunity coming from Design365 than we originally thought, so we are now looking to employ even more staff.”
White Digital now plans to open a new office in the region to accommodate the growing team and give employees more flexibility in where they work.