While 5% may sound low, your initial asking was 10%. It is common for companies to negotiate the pay, and meet in the middle. If you had wanted 10% increment, you should have asked for a 20% increment.

Separately, it is not clear how long have you been with the existing company. This could be one of the reasons for a 5% increment. In a smaller company, you have to do everything, but the standards are looser. There are also more limited growth in a smaller company. In a larger entity, your scope is more limited and you would have more structure. If you want to grow further, I would recommend the larger entity. Even if you are not happy with the 5% increment, there is not much you can do, since you had a very low asking, to start with. Look at the larger entity as a stepping stone to a bigger role or better increment.

If you think it is easy to find another job in another similar large setup, you can always reject this offer and try again. This time, remember to ask for a higher increment, to start.