In 1995, Electronic Data Systems, the American IT services group, purchased AT Kearney, the global strategy consultancy in a one-year deal. value of $596 million. The acquisition of a wildly successful management consulting firm by a global IT company. Several concerns were raised. One was the difference between the individualistic, entrepreneurial style of AT Kearney and the more bureaucratic approach of EDS. Another concern was the alignment of incentives when combining the high-reward culture of a partnership with the results-driven mentality of a large, publicly traded company. CASE STUDY 11. The type of merger between Electronic Data System (EDS) and AT Kearney is called a vertical forward merger. A direct vertical merger occurs when two or more companies combine in the same industry but in a different field or when two companies produce goods and services for one product. Electronic Data System, the American information technology group, has roped in global strategy consultancy AT Kearney in a deal worth $96 million. Electronic Data System was a company involving the production of information technology equipment purchased by AT Kearney, an IT consultancy company. , the first five years were considered 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 the company recorded its highest revenue ever, at $1.3 billion. Despite the challenges AT Kearney faces, they recorded highest revenues of $1.3 billion in 2000. The likely reasons are: Reduced production costs: Profound management changes took place when Richard Brown is named CEO of EDS. He believed that reducing excessive labor costs would have a positive impact on the company's profits. Therefore, the introduction of this new business model has worked positively and could lead to an increase in revenues in 2000. Combining the back office function of AT Kearney with that of EDS: another vital decision Richard was to bring many of T Kearney's back office functions under one EDS roof, as this could result in a reduction in overhead costs such as rent, insurance, electricity, excess employment, etc. exchange money with each other. The merger is generally carried out free of charge; this is likely a reason for the high revenues made by AT Kearney despite the challenges they face. of 2005, equivalent to a loss of $36 million.