In 1995, Electronic Data Systems, the US information technology services group, purchased AT Kearney, the global strategy consultancy in a deal valued at 596 million of dollars. The acquisition of a highly successful management consulting firm by a global IT. Several concerns have been raised. One was the difference between AT Kearney's individualistic, entrepreneurial style and EDS's more bureaucratic approach. Another concern has been the alignment of incentives when combining the high compensation culture of a partnership with the profit-focused mentality of a large publicly traded company. CASE STUDY 11. The type of merger between Electronic Data System (EDS) and AT Kearney is called direct vertical merger. Direct vertical merger occurs when two or more companies merge in the same industry but in different fields or when two companies produce goods and services for one product. Electronic Data Systems, the US IT group, has brought in AT Kearney, a global strategy consultancy, in a deal worth $96 million. Electronic Data System was a business involving the manufacturing of computer equipment purchased by AT Kearney, an IT consultancy firm. 2. Despite the challenges AT Kearney faces, it enjoyed higher revenues of $1.3 billion in 2000. The likely reasons for the high revenues are: Despite such culture clashes, the first five years were judged to be a financial success as AT Kearney was able to take full advantage of the rapidly expanding management consulting market. AT Kearney's revenues tripled, and in 2000 it recorded its highest ever revenue of $1.3 billion. Despite the challenges facing AT Kearney, it enjoyed higher revenues of $1.3 billion in 2000. The most likely reasons are: Reduction in production costs: Huge managerial changes occurred when Richard Brown appointed CEO of EDS. He believed that reducing excess labor costs would have a positive impact on the company's profits, therefore the introduction of this new business model worked positively and could be the result of increased revenue in 2000. Combining the back function office of AT Kearney with that of EDS: another vital decision Richard What was necessary was to bring many of T Kearney's back office functions under the same roof as EDS as this could result in a reduction in overhead costs such as rent, insurance, electricity, excess jobs, etc. To a large extent. A free merger: the merger of two companies does not exchange money with each other. The merger is usually done free of charge; this is a likely reason for the high revenue made by AT Kearney despite the challenges faced. of 2005, equal to a loss of 36 million dollars.