Jake Bittner: Turning a Money-Losing IT Shop into a $35 Million GovTech Exit

Searchers typically seek businesses with recurring revenue, strong margins, and a history of profitability. Jake Bittner went a different direction. In 2010, he acquired a money-losing, project-based government contracting division that its parent company was desperate to offload.

Through a grueling, decade-long operational transformation, Bittner pivoted the business from a low-margin IT "body shop" into a high-value data analytics firm called Qlarion. In 2021, he sold that business for $35 million, at an 11x EBITDA multiple.

However, Bittner's story is as much a cautionary tale about the perils of post-exit earnouts and independent sponsor structures as it is a triumph of a turnaround strategy.

Bittner’s path to entrepreneurship was heavily influenced by observing what not to do. While his mother (a successful motorsports PR manager) expanded his horizons through international travel, his father provided a different kind of education. A lawyer-turned-entrepreneur, Bittner’s father chased massive, shoot-for-the-moon ideas without laying a solid financial or operational foundation.

One such venture involved building a massive community tire-recycling facility in Detroit before securing any customers for it. The resulting financial devastation cost his father two marriages and, tragically, his life to a stress-induced heart attack at age 50, right as Bittner was finishing college.

This outcome instilled a deep philosophy in Bittner: true entrepreneurs are not reckless risk-takers; they are meticulous risk mitigators. Before starting a business, Bittner was determined to build a bulletproof financial nest egg and acquire the exact skills necessary for survival.

Despite earning a degree in mechanical engineering from Yale University, Bittner realized that engineering wouldn't teach him how to run a business. Sales would.

"The ability to actually take a customer requirement and turn it into some cash in your account... from scoping to contracting to convincing somebody to work with you... if I could do that, I could build a business," Bittner said in an appearance on the Acquiring Minds podcast.

He spent the next decade in enterprise software sales at MicroStrategy, Informatica, and Business Objects (later acquired by SAP). He navigated the wild highs of the dot-com boom and the stifling bureaucracy of massive tech conglomerates. By 2010, he had built the financial cushion he needed, mastered the enterprise sales cycle, and was ready to step out on his own.

Bittner’s big break didn’t come from a broker; it came from a former colleague. Cadence Quest, a data analytics company, was being acquired by Accenture. However, Accenture was only interested in Cadence Quest’s commercial retail analytics division. The company's small, money-losing government contracting arm was muddying the waters of the deal.

Bittner and his business partner, Adam Roy, were brought in to manage this government entity. Accenture eventually barred the original owners from injecting any more capital into it. Facing a dead end, Bittner and Roy realized they had to buy the entity themselves or walk away completely.

But how do you value a business that is actively losing money?

Instead of arguing over arbitrary multiples, they hired two independent valuation firms. Both came back with a valuation between $600,000 and $700,000. While the P&L was negative, the business held intrinsic strategic value:

Because the sellers had just received a massive windfall from the Accenture deal, they cared less about cash upfront and more about getting the messy asset off their hands. Bittner and Roy negotiated a 100% seller-financed deal at an interest rate of 10% to 12%. They didn't have to put a single dollar of equity down to buy the business. They rebranded the carveout as Qlarion (using the "Q" as a nod to the original Cadence Quest name).

The first phase of Qlarion was pure survival. To service their substantial seller note and turn a profit, they had to act as a "body shop"—an IT staffing firm that placed technical contractors into government roles on short-term projects, essentially selling resumes.

This model was highly volatile. Gross margins hovered around 20%, and employee loyalty was virtually non-existent. Bittner dealt with nightmare scenarios: contractors losing security clearances for soliciting prostitutes, employees taking signing bonuses and fleeing the country, and people showing up to jobs who weren't the ones who originally interviewed.

Realizing the model was a treadmill to nowhere, Bittner and Roy analyzed their best client: the City of Boston. With Boston, Qlarion wasn't just providing bodies; they were building a multi-year analytics program.

They then applied Jim Collins' "Hedgehog Concept" (from the book Good to Great) to pivot the business. They asked themselves three fundamental questions:

Qlarion strictly narrowed its focus. They stopped chasing generic IT staffing requests and focused exclusively on state, local, and federal analytics programs. They built groundbreaking solutions, including an award-winning opioid data-sharing platform for the Commonwealth of Virginia that safely bridged healthcare and law enforcement databases.

This pivot changed everything. Customer retention jumped from 54% to over 90%. Because they were delivering massive ROI to clients, they commanded premium pricing. By 2021, Qlarion was generating roughly $20 million in revenue and $3.1 million in EBITDA.

In 2021, on the heels of major success providing data analytics for COVID-19 responses, Qlarion began receiving unsolicited acquisition offers. Though Bittner and Roy were content to hold the business indefinitely, the macroeconomic environment was shifting. Interest rates were at rock bottom, and private equity was paying massive premiums. Advisors warned Bittner that if he didn't sell now, he might work for another seven years just to get the same offer.

They accepted a bid from GCOM (now Voyatek), a strategic acquirer backed by Sagewind Capital, a prominent Independent Sponsor.

The Deal:

Bittner joined the acquiring company as Chief Growth Officer to oversee the transition and the earnout period. He quickly realized he had stepped into a highly political, dysfunctional corporate environment. He stayed for a year to ensure Qlarion hit the exact performance metrics required to trigger the first massive tranche of their earnout (roughly $8-$9 million).

"If they [had] paid us, they'd be out of line with the covenant on their loan," Bittner reveals.

This exposed a critical structural reality of selling to an Independent Sponsor. Unlike traditional private equity funds that have a pool of committed capital to draw from if a portfolio company struggles or needs a cash injection, independent sponsors raise capital on a deal-by-deal basis.

"An independent sponsor doesn't have a bucket of money to reach back into to help solve problems... they would have to go out and raise new money," Bittner notes.

The acquirer implicitly dared Bittner to sue them, pointing out that even if Bittner won, the company would likely be forced into a restructuring, paying pennies on the dollar and wiping out Bittner's $5 million in rolled equity in the process.

It took a year and a half of agonizing negotiation, but the acquirer eventually honored the earnout payment (with penalties). Shortly after, however, the heavy debt load from the acquisition, combined with a post-COVID revenue crash, led to the acquirer’s restructuring.

Post-exit, Bittner faced a severe identity crisis. "I didn't have a personal email. I owned the company. I didn’t want to get a personal email for it. You're just inseparable," Bittner commented in an appearance on the Branching Out podcast.

After taking time off to ski and decompress, Bittner found his next calling. Today, he operates Bittner Performance Group, offering business coaching to searchers and CEOs, helping them implement the exact scaling frameworks (like the Hedgehog concept and OKRs) that took him a decade to learn the hard way. He also invests in GovTech ETA deals through Mission Support Partners.

Despite the bitter end to the Qlarion legacy, Bittner remains a staunch advocate for the GovTech sector. He points to the massive "stepping stone" growth potential (where winning a $200k contract easily qualifies a firm to win a $1M contract) and the deep satisfaction of having a tangible impact on public missions.

His ultimate advice to new CEOs, however, has nothing to do with financial modeling or deal structures. It stems directly from the tragedy of his father's entrepreneurial journey.

"The number one most important thing for a CEO to do is: take care of yourself mentally and physically." Bittner offers, adding, ”Whatever you're dealing with in the business today, they're going to be there tomorrow."