What Quadrint built before CACI came calling

A bulk of the conversation that surrounds merger-and-acquisition activity across the government market typically works its way toward where the buyer wants to go.

Looking at what the selling company built along the way is helpful too in order to understand how its path led to growth and being acquired.

In April, CACI International announced its purchase of application modernization company Quadrint for an undisclosed sum. CACI CEO John Mengucci told investors in an April 25 earnings call that the move brings "specific customer relationships and past performance in the IC (intelligence community) that are additive to our business."

Glenn Merberg and Patrick Acheson started Quadrint in 2000 to focus on the human capital management functions of intelligence agencies, including corporate business systems, and gradually pushed more into mission-facing application development.

"Both of us had come out of commercial Peoplesoft implementation work and both of us had come out of the technical side," Acheson told us. "Those modernization efforts that all the agencies were doing when we started, it was all around Y2K."

Merberg said Quadrint came together when he and Acheson were working on a pair of different contracts for a PeopleSoft implementation, which the client decided to consolidate into a single acquisition.

They decided early on to sign with a team and not pursue the larger contract as a prime.

"We merged our companies together so we could negotiate with whatever 'larges' were going take a swing at this thing," Merberg said. "We realized we had a lot of talent; we knew how to develop talent."

Accenture's U.S. federal arm won the contract in 2004 and Quadrint took on a "tremendous amount of work share," Merberg said.

Of course, Quadrint eventually made the leap to become a prime contractor and won multiple recompetes of its largest program. Quadrint also reached the next checkpoint many companies arrive at when some external investment could help.

Enter into the equation Blue Delta Capital Partners, the government market-focused venture firm that backed Quadrint after watching the company for five years.

"We talked long enough that they played through another defense of the recompete, so that emboldened us," said Kevin Robbins, a co-founder and general partner at Blue Delta. "When you see somebody who's been on a contract for three or four revolutions, that's a spot we lean in."

Quadrint scored a needle-moving recompete win in 2016 that doubled in size from the predecessor as the customer decided to undertake a larger-scale human resources transformation initiative.

That win was also the point when Quadrint decided it also should take in some growth coaching along with the financial backing of Blue Delta, Acheson said.

"We talked through their ability to help us build an infrastructure, to help us hire the right talent to help, help us figure out how to build a much more robust growth pipeline and how to do an acquisition," Acheson said.

Quadrint went into its next phase of expansion and wins, including a pair of $100 million prime full-and-open contracts. The company started getting attention, including from others interested in partnering with and potentially acquiring it.

Acheson highlighted two qualities they drew up for a potential buyer: first a unique understanding Quadrint's mission set in the intelligence community, and also one that would treat the employees well.

"We invested so much in relationship building with those customers," Merberg said. "We felt like they really took a leap of faith on us because we worked really hard at convincing them that we knew how to do that work."

Quadrint became available to buy just as fellow Blue Delta-backed Definitive Logic went through the process of being acquired by ManTech.

CACI was not the highest bidder of the three final candidates to acquire Quadrint, Robbins said, while adding the conversation about what to do next was quick.

The decision as Robbins put it: "This is the right deal for us, they're going to honor the mission, they're going to take care of our people."

Investment bank KippsDeSanto & Co. acted as the lead financial adviser to Quadrint