In mergers and acquisitions (M&A), the buyer’s goal is simple: acquire value with legal certainty. But value does not transfer automatically just because a share purchase agreement or merger plan is signed. In Turkey, whether assets, liabilities, contracts, and security interests move depends on the transaction structure—and the structure determines the legal mechanics of asset transfer.
M&A transactions in Turkey typically fall into three broad categories:
- share deals (buying shares of the target company),
- asset deals (buying selected assets and liabilities), and
- statutory transformations under the Turkish Commercial Code, including mergers (birleşme) and certain reorganizations that can produce universal succession effects.
This article focuses on how asset transfer works in Turkish law in the M&A context, with particular emphasis on the practical differences between share deals, asset deals, and statutory mergers. It also highlights how security interests, permits, contracts, and employee relationships are handled in real transactions.
1. Share Deal vs. Asset Deal vs. Statutory Merger: Why Structure Controls Transfer
1.1. Share Deals: Ownership Changes, Company Stays the Same
In a share deal, the buyer acquires shares; the company remains the owner of its assets and the debtor of its liabilities. This is why share deals often feel operationally easy: contracts, permits, employment relationships, and assets remain under the same legal entity.
Key implication: the buyer inherits the target “as is,” including hidden liabilities and existing encumbrances. Therefore, legal due diligence and warranties become central.
1.2. Asset Deals: Individual Transfers for Each Asset Category
In an asset deal, selected assets and liabilities move to the buyer (or a new entity). But this requires individual transfer acts:
- delivery for movables,
- assignment for receivables,
- registration for real estate,
- consent for contracts where required,
- and regulatory steps for licenses/permits.
Key implication: asset deals allow carve-outs but are execution-heavy and risk “transfer gaps” if not mapped carefully.
1.3. Statutory Mergers: Universal Succession Logic
In a statutory merger (birleşme) under the Turkish Commercial Code, the acquiring entity generally succeeds to the assets and liabilities of the absorbed company through a universal succession effect, meaning that many elements transfer by operation of law rather than individual assignment.
Key implication: mergers can be highly efficient for transferring entire businesses, but they require strict procedural compliance (merger agreements, reports, approvals, registrations) and careful handling of regulated assets and contracts.
2. How Assets Transfer in Statutory Mergers: Practical Meaning of Universal Succession
Universal succession is often described as “everything transfers.” In practice, investors should interpret this as:
- assets and liabilities move by law at the effective time of merger registration,
- the absorbed company ceases or is dissolved without liquidation (depending on merger type),
- the acquiring entity steps into contractual positions in many cases.
However, “everything” still has boundaries:
- certain licenses may require regulatory consent even if the entity changes,
- certain contracts may contain change-of-control clauses or personal performance elements,
- and security interests may require registry alignment or notifications for practical enforcement.
Therefore, even in mergers, transaction teams usually run a transfer mapping exercise to identify elements requiring extra steps.
3. Key Asset Categories in M&A Transfers
3.1. Real Estate
Real estate is highly registry-driven. Even where a merger provides universal succession, practitioners pay close attention to:
- land registry records,
- existing mortgages and annotations,
- zoning and permit compliance,
- and post-merger registry updates for clarity.
3.2. Movables (Machinery, Equipment, Inventory)
Movable assets transfer can be straightforward in share deals (because the company still owns them). In asset deals, delivery and schedules are crucial. In mergers, universal succession helps, but asset identification still matters for:
- collateral monitoring,
- insurance,
- and enforcement readiness.
3.3. Receivables and Contracts
Receivables and contract rights are central to operating value. In asset deals, assignment mechanics and debtor notices become critical. In mergers, the acquiring company typically steps into the absorbed company’s contractual position, but:
- counterparties may resist operationally,
- set-off and defenses remain,
- and certain contracts may require consent due to regulatory or personal nature.
3.4. Intellectual Property
IP transfers are often registry-specific. In asset deals, assignments and registry filings are often needed. In mergers, universal succession helps, but registry updates and evidence are still important for third-party enforcement and licensing.
4. What Happens to Liabilities?
Liabilities are the “shadow” of assets. In share deals, liabilities remain with the target company—meaning the buyer indirectly bears them. In asset deals, liabilities transfer only if assumed. In mergers, liabilities typically transfer with universal succession, which is a key reason mergers can be used for group reorganizations.
5. Security Interests and Encumbrances: Do They Move?
Security interests are frequently the hardest part of M&A transfers because they involve third-party rights. Practical issues include:
- existing pledges and mortgages that remain attached to assets,
- lender consents and release requirements,
- intercreditor issues where refinancing occurs,
- and registry alignment after structural change.
In share deals, security remains in place because assets remain with the same entity. In mergers, security typically follows the assets, but lenders often require notifications, confirmations, or amendments to reflect the new structure.
6. Employees and Operational Continuity
In many transactions, the most valuable “asset” is the workforce. Share deals generally preserve employment relationships without legal transfer. Asset deals often require employee transfer arrangements. Mergers can transfer employment relationships by law, but practical integration and compliance remain important.
7. Closing Mechanics: How to Avoid Transfer Gaps
To avoid post-closing surprises, transaction teams typically use:
- asset transfer mapping and schedules,
- conditions precedent tied to registry and consent steps,
- detailed closing deliverables,
- transitional service arrangements where assets/operations are split,
- and post-closing covenants to complete any staged transfers.
Conclusion
In Turkey, asset transfer in M&A depends on structure. Share deals transfer control, not assets; asset deals transfer assets but require individual legal acts; statutory mergers offer universal succession but still demand procedural discipline and special handling for regulated elements. The safest and most efficient outcomes come from early transfer mapping, strong due diligence on encumbrances and contracts, and closing mechanics designed to eliminate transfer gaps.
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