Mergers and Acquisitions (M&A)

in Turkey

Merger and Acquisition (M&A) transactions in Turkey, especially in Istanbul have been rapidly increasing over the years in value and number of transactions when Turkey’s opening policies to attract foreign investments loosens up.  The M&A due diligence and execution are therefore important steps to ensure a successful transaction.


For foreign investors wishing to take advantage with a certain level of risks in Turkey where the cost of labor are cheap, mid-income populations are growing, and the need of capital are high, it is important to find the right target companies to invest.  Challenges might arise when approaching the right local companies, locating the right decision makers within the local companies, encountering differences in languages and cultures.


It is important that the local English speaking Turkish lawyers in İstanbul with the understanding of the business and legal environment in Turkey where the Turkish companies are incorporated could be involved at an initial stage to monitor and minimize the risks, improve the effectiveness of the M&A process in İstanbul, Turkey.

The rules that M&A are regulated under differs from country to country. As to how M&A activities are realized in Turkey are specified under Turkish respective codes. Turkish Commercial Code (“TCC”) is one of the Turkish laws that M&A activities are regulated. Turkish tax laws, the Law on the Protection of the Competition and Capital Market legislations are other regulations that M&A activities are applied.


Yönet’s English speaking Turkish lawyers who have an international lawyer approach could provide corporate intelligence and insights of the targeted companies in Turkey to have an overall evaluation of the compliance of the Turkish companies, possible risks involved and growth potential.  Financial forensic services might also be needed before other further steps.  Then, the following will need to be considered when undertaking the M&A in Turkey.


M&A Due diligence in Turkey


M&A due diligence in Istanbul, Turkey is a vital step because it determines whether the M&A will succeed or not. There are some aspects that must be carefully considered:


Financial reports


A foreign / international / multinational company must review all the financial reports of the targeted companies in Turkey within 3 to 5 years to assess the current and future financial situation. These data needs to be audited by a reputable independent auditing company. Evaluating financial situation targets on many aspects such as the reasonable connection between the financial statements, operating and sales margin of the business in relation to the average in that industry.  These data allow valuation real value of the target business.


The cash flow


Checking the dates on invoices showing that whether targeted businesses have paid promptly or not. Term of payment may vary from industry to industry, but generally 30 to 60 days. If the money order is paid after the billing date period of 90 days or more, it means that the business owner may be struggling with cash flow. Finding out that if the clients’ inability to pay bills or not is very important.


The staff


Determining the importance of staff for the success of the business considering work habits of employees, working time of key employees; ability to remain working after a change of the owner occurs; the incentives necessary to keep key employees; ability to easily replace key employees; the relationship of key employees with the company’s customers.


The customers


This is the most important assets of the targeted company in Istanbul, Turkey. Make sure that clients are as the other tangible assets of the business. Evaluating customers on some primary aspects: the relationship with the current owner of the business, customer history with business relations and the contribution of each customer to the profits of the company; assessing that customer will leave or stay when the business having new owners; customer services and dispute of the company, the relationship of the former owner of the business with the community or the industry.


Business location


This is especially important if the targeted company is a retail company. Does the importance of business location play a crucial role for the success of the company? How is the location of the company you plan to acquire? Is there sufficient parking lot for customers? How does the company depend on sales in the region? How is the prospects of the business in this area? Does this place have been in the process of rapid change from new residential district office building or not? Has business location become more or less desirable because of contemplated changes in surrounding area or not?




Considering this aspect in order to define the capacity of the targeted business in the industry, the following questions would help: who are its competitor and what are their strategies? Does the price war happen frequently? How has the competitive environment changed?


Business registration, permits and zoning


It’s necessary to make sure that business registration certificate and other legal documents can be easily given to the buyer. It would be better to acknowledge the procedures to transfer these documents and its fee with the help of local management consulting company in Turkey. If the targeted company is a joint-stocks company, what is the procedure for the business registration? Can foreigners own the company 100% according to Turkish laws?  Conditional investments in Turkey need to be considered carefully by Turkish lawyers in Turkey to avoid mishaps.


Legal Documents


All legal documents, cases, contracts etc. must be carefully reviewed by the best corporate lawyer in İstanbul and the best international law firm in İstanbul.


The company image


Company image can be a significant asset and that cannot be assessed in the financial report. There are many intangible factors to consider when evaluating a company: how to serve customers, how employees answer the phone and the level of support the community or the industry.


Negotiate the price


It is important to understand the purpose and motivation of both parties. The sellers’ motivation are formed and affected by value drivers. There are two main value drivers which are approach value and avoidance value. Approach value is our purpose such as prosperity and avoidance value is the negative effect that we need to eliminate. Normally, the buyers try to find out what are the reasons why the owner wish to sell the companies. This will help the buyers plan a reasonable strategy beforehand.


The motivation of the buyer in most cases is similar to the motivation of the seller, which is to maximize profits, expand markets, increase revenue, operating areas, areas of activity, minimize taxes.



YÖNET's practice on mergers and acquisitions encompasses representing clients in mergers and de-mergers, acquisitions, transfer of businesses and shareholdings in sectors such as real estate, finance, telecommunications, steel, media and energy. Our lawyers are well equipped with in-depth knowledge and professional skills required for conducting due diligence exercises, formulating corporate structures, drafting share purchase and shareholders agreements and obtaining regulatory approvals in respect of mergers between and acquisitions of, both closely-held and publicly-held companies.

Please click here for more information about YÖNET's M&A practice.