A legal due diligence report is a document prepared before buying a company to identify its main legal risks.
For a foreign investor purchasing a Turkish company, the report helps answer one basic question:
What legal problems may I acquire together with this business?
What Is Reviewed?
A legal due diligence review may cover:
- company and shareholder records;
- tax and SGK liabilities;
- lawsuits and enforcement proceedings;
- employee claims;
- bank loans and guarantees;
- important contracts;
- licences and permits;
- real estate;
- trademarks and intellectual property; and
- regulatory risks.
Why Is It Important?
The findings may directly affect the transaction.
For example, if the company has an undisclosed tax risk or major lawsuit, the buyer may:
- reduce the purchase price;
- request an indemnity;
- retain part of the price;
- require the problem to be resolved before closing; or
- decide not to proceed with the acquisition.
Conclusion
A legal due diligence report is not simply a list of company documents.
It should identify the main risks, their potential effect on the investment and the legal protections the buyer should request in the acquisition agreement.
For foreign investors, completing due diligence before transferring the purchase price can significantly reduce acquisition risk.
This article provides general information and does not constitute legal advice.
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