M&A in Turkey: Company Acquisitions and Mergers Explained (Process, Structures, Key Risks)
Buying a company in Turkey—or merging with one—can be a fast way to enter the market, gain customers, or consolidate operations. But Turkish M&A is not only about agreeing on a price. The success of a deal usually depends on (1) the right transaction structure, (2) proper corporate approvals and filings, (3) clean transfer of control (signing authority, banking access), and (4) managing legal risks discovered during due diligence.
This guide explains company acquisitions and mergers in Turkey in a practical, step-by-step way: the main deal structures, the typical M&A timeline, the documents used, and the most common legal pitfalls foreign investors should plan for.
1) What Counts as “M&A” in Turkey?
In practice, “M&A” in Turkey usually covers:
- Share acquisition (Share Deal): buyer purchases shares of the target company (Ltd. Şti. or A.Ş.) and takes over the legal entity with its history.
- Asset acquisition (Asset Deal): buyer purchases selected assets (contracts, equipment, IP, inventory) rather than the shares.
- Merger (Statutory Merger): companies merge under Turkish corporate rules (often used in group reorganizations, consolidation, or strategic combinations).
Each route has different impacts on liabilities, approvals, taxes, and operational continuity.
2) Share Deal vs Asset Deal in Turkey: Which One Is Better?
Share Deal (Buying Shares)
A share deal is often preferred because the company continues operating without transferring every single asset and contract one by one.
Pros
- operational continuity (same company, same licenses where applicable)
- often simpler execution (one main transfer)
- commonly used for foreign acquisitions
Cons
- you inherit past liabilities (tax/SGK exposure, employee claims, litigation risks)
- you must rely heavily on due diligence + warranties/indemnities
Asset Deal (Buying Assets)
An asset deal can be safer for liability isolation but more complex operationally.
Pros
- buyer can select which assets/liabilities to take
- can reduce “historical baggage” risk
Cons
- contract transfers may require consents
- licenses/permits may need re-issuance or notifications
- more paperwork (transfers, assignments, registrations)
Practical takeaway: If you want continuity and speed, share deals are common; if you want maximum liability control, asset deals may be considered—depending on consents and regulatory reality.
3) Typical M&A Timeline in Turkey (High-Level)
Step 1: Strategy and Term Sheet (LOI)
Deals often start with a non-binding Letter of Intent (LOI) / term sheet covering:
- valuation and payment mechanics
- exclusivity period
- due diligence scope and timing
- confidentiality and data room rules
- key conditions (consents, pledge releases, approvals)
Step 2: Due Diligence (Legal, Tax, Financial)
In Turkish practice, due diligence focuses on:
- corporate records and share ownership
- share pledges/encumbrances
- key contracts and change-of-control clauses
- public debts (tax and SGK)
- employment liabilities
- litigation and enforcement
- IP and technology rights (if relevant)
Due diligence findings usually drive:
- price adjustments,
- specific indemnities,
- closing conditions,
- escrow/retention.
Step 3: SPA Drafting and Negotiation
The Share Purchase Agreement (SPA) allocates risk through:
- representations and warranties
- indemnities for known issues
- caps, baskets, de minimis thresholds
- survival periods (time limits)
- disclosure schedules
- conditions precedent and closing deliverables
Step 4: Closing
Closing is where control truly transfers. In Turkey, the most critical “control switch” is often:
- proper share transfer execution and records,
- appointment/resignation of directors/managers,
- signing authority updates,
- banking access and KYC readiness.
Step 5: Post-Closing Integration
The first 30–90 days typically include:
- compliance alignment (tax, accounting, corporate records)
- contract notices/consents follow-up
- internal controls and approval matrix
- HR documentation cleanup
- tracking warranty/indemnity deadlines
4) Mergers in Turkey: What Makes Them Different?
A statutory merger is typically used when two companies combine under formal corporate procedures, often in:
- group restructurings,
- consolidation of subsidiaries,
- strategic integrations after acquisitions.
Merger processes are usually more “procedural” than share deals because they involve:
- formal merger documentation,
- corporate resolutions and filings,
- protection mechanisms for creditors and shareholders,
- structured registration steps.
For many commercial acquisitions, a share deal is more common; for corporate reorganizations, mergers become more relevant.
5) Key Legal Issues Foreign Buyers Often Miss
A) Share Pledges and Encumbrances
Shares may be pledged to banks or third parties. If not released before closing, the buyer can face control and enforcement risk.
B) Change-of-Control Clauses
Key contracts (customers, distributors, software vendors, banks, landlords) may have clauses that:
- require consent, or
- allow termination upon acquisition.
C) Public Debts (Tax and SGK)
Public liabilities can become a major post-closing problem if not handled through:
- settlement before closing, or
- specific indemnities + escrow.
D) Weak Corporate Records
If corporate books and approvals are incomplete, the deal’s validity and enforceability can become dispute-prone later.
E) Signing Authority Not Updated Immediately
Even after shares transfer, operational control can be stuck if old signatories remain active in practice.
6) How to Make Turkish M&A Deals Safer (Practical Best Practices)
- Choose the correct structure (share vs asset vs merger) based on liability and consent reality
- Treat due diligence as deal design, not a checkbox
- Convert findings into SPA protections (indemnities, conditions, escrow)
- Make signing authority + banking access a closing-critical workstream
- Build a post-closing plan with deadlines for warranty claims and compliance integration
FAQ
Can foreigners buy companies in Turkey?
Yes. Foreign investors can acquire shares in Turkish companies, subject to any sector-specific restrictions that may apply.
What’s the most common M&A structure in Turkey?
For many acquisitions, a share deal is common because it preserves operational continuity, but the best structure depends on liabilities and consent requirements.
What usually causes delays at closing?
Unreleased share pledges, missing approvals, contract consents, and banking/KYC readiness issues are among the most frequent delay drivers.
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