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Monday, August 29, 2005

A.T.Kearney Still Finding A Suitor

Talks to sell A.T. Kearney, the high-end consulting arm to another consulting firm, Monitor Group, collapsed after negotiations failed to yield an acceptable agreement.EDS bought A.T.Kearney about a decade ago for around $600 million. A.T. Kearney had revenue of $806 million for all of last year employs over 3,200 people in 35 countries, had an operating loss of $10 million in the period. Earlier, EDS in a bid to make A.T.Kearney independent, the company's headquarters was shifted to Chicago and new advertising campaign was launched that didn't include the "An EDS company" tagline. As the move did not yield results,EDS believes "it's in the best interest of A.T. Kearney to have a new ownership”. In June EDS said it had shifted its plans for A.T. Kearney, opting to sell the business to an outside party and abandoning pursuit of a management buyout. Who could be the takers? How about offshoring companies- they may be worried about the high cost structure and negative cash flow - but this also opens up a fresh question - what specific value can A.T.Kearney provide to acquirers .In the consulting arena, just as in technology sector, the cost structures are changing - India HQ vendors are definitely attempting newer ways of providing services in the consulting space as well.They would be concerned about mucking their profitability streams, if they plan to acquire A.T.Kearney with its existing cost structure and its mode of operations.Some one not having a established consulting practice - trying to move up the value chain,can perhaps consider - even though the cost may appear to be high.

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