Buying a company in Turkey can be an efficient way to enter the market, acquire an operating platform, and scale quickly—without building everything from zero. But for foreign buyers, the biggest risks are rarely “market” risks. The real threats are hidden liabilities and weak documentation: tax and SGK exposure, undisclosed litigation, contracts that terminate on change of control, informal related-party dealings, unclear signing authority, and assets that are not legally owned by the target.
This SEO-focused guide explains how to buy a company in Turkey step by step: target screening, NDA and data room setup, LOI/term sheet, due diligence, SPA drafting, pricing mechanics (net debt and working capital), escrow/holdback, closing deliverables, and the first 100 days post-closing.
1) Company Acquisition in Turkey: Share Deal vs Asset Deal
In Turkey, acquisitions are typically structured in two ways:
A) Share Deal (Share Purchase)
- The buyer purchases the shares of the target company.
- Business continuity is usually easier: contracts, licenses, and employees often remain in place.
- Key risk: the buyer inherits historical liabilities inside the company (tax/SGK, disputes, compliance).
B) Asset Deal (Asset Purchase)
- The buyer purchases selected assets (inventory, equipment, IP, customer portfolio, etc.).
- Can isolate some historical liabilities more effectively.
- Key risk: VAT treatment, transfer formalities, contract assignment consents, and operational transition complexity.
Practical rule: If continuity is critical, share deals are common. If historical risk is too high, buyers may prefer asset deals—or a share deal with stronger warranties, indemnities, and escrow.
2) Step 1 — Screen the Target: Choose the Right Company First
Before any documents, foreign buyers should filter targets by:
- regulatory licensing requirements (sector-specific permits),
- customer concentration (revenue dependency on 1–3 customers),
- reporting and accounting discipline (ERP, management accounts),
- founder dependency (key-person risk),
- IP ownership (company-owned vs founder-owned),
- bankability (clean financial statements and cashflow).
Fast red flag: “Everything is verbal” culture and weak corporate records—this often signals hidden liabilities.
3) Step 2 — Sign an NDA and Build the Data Room
The acquisition process usually starts with:
- an NDA (Non-Disclosure Agreement), and
- a data room where the seller uploads key documents (corporate records, contracts, financials, litigation list, permits, etc.).
Practical tip: Add strong clauses on permitted use, data security, return/destruction of information, and non-solicitation of employees (where commercially appropriate).
4) Step 3 — Term Sheet / LOI: Set the Deal Architecture Early
A term sheet or LOI (often partially non-binding) typically covers:
- price range and payment structure (cash, installments, earn-out),
- escrow/holdback principles,
- due diligence scope and timeline,
- closing conditions (conditions precedent),
- exclusivity (no-shop period),
- cost allocation.
Goal: Align on the “big picture” before spending money on detailed due diligence.
5) Step 4 — Due Diligence in Turkey (Legal, Tax, Financial, Commercial)
A) Legal Due Diligence
- share title and encumbrances (share pledges, options, ROFR),
- signing authority and corporate approvals,
- material contracts + change-of-control clauses,
- litigation and enforcement proceedings,
- real estate title and encumbrances (mortgages, liens, attachments),
- licenses and regulatory compliance,
- IP/software ownership and assignments.
B) Tax Due Diligence
- corporate income tax filings and reconciliation,
- VAT (KDV) compliance and invoice discipline,
- withholding tax (stopaj) issues, including cross-border payments,
- SGK/payroll compliance cross-check,
- transfer pricing and related-party transactions,
- tax audits, assessments, disputes, limitation timelines.
C) Financial Due Diligence (Quality of Earnings)
- revenue quality and customer concentration,
- EBITDA normalization (owner expenses, one-offs),
- net debt and “debt-like items” (overdue taxes/SGK, provisions),
- working capital trends and seasonality,
- receivables aging, inventory obsolescence,
- capex needs and cash conversion.
D) Commercial Due Diligence
- customer churn and renewal risk,
- supplier stability and pricing power,
- pipeline quality,
- key-person risk in sales/operations,
- competitive positioning.
Golden rule: Due diligence findings must be converted into SPA protections (price adjustments, escrow, specific indemnities), not just “noted.”
6) Step 5 — Build the Pricing Mechanics: Net Debt + Working Capital
In Turkey, many SPAs use a cash-free, debt-free model:
- cash is adjusted separately,
- debt is adjusted separately,
- the business must deliver a normalized level of working capital.
Typical logic:
- Net Debt adjustment (what debt-like items exist at closing?)
- Working Capital adjustment (actual NWC vs target NWC)
Turkey-specific pitfall: Tax/SGK arrears and related-party balances can be misclassified as “ordinary payables,” distorting net debt and working capital.
7) Step 6 — Draft the SPA: The Clauses That Decide the Real Outcome
Key SPA sections foreign buyers should focus on:
- Representations & Warranties + Disclosure Schedules
- Indemnities (general + specific indemnities for known risks)
- Liability limits: cap, basket, de minimis, survival periods
- Closing conditions (CPs)
- Escrow/holdback + claim and release mechanics
- Non-compete / non-solicit (where appropriate)
- Dispute resolution (courts/arbitration) + notice rules
- Post-closing covenants (reporting, transitional support)
Without these protections, buyers often “own the risk” by default.
8) Step 7 — Conditions Precedent: What Must Happen Before Closing
Common closing conditions in Turkish M&A include:
- required shareholder/board resolutions,
- updating signing authority and corporate records,
- obtaining key contract consents (change of control),
- releasing share pledges/mortgages (if required),
- settling related-party balances,
- resolving specified litigation or compliance items,
- completing corporate cleanup (books, minutes).
A strong CP list prevents closing into a company that is still legally “messy.”
9) Step 8 — Closing Deliverables: Documents and Practical Steps
At closing, parties typically exchange:
- share transfer documents and payment evidence,
- updated corporate resolutions and registry filings,
- updated signatories and banking mandates,
- escrow instructions (if used),
- security documents (share pledge, mortgage, guarantees),
- management appointments and governance updates,
- closing checklist completion confirmations.
Practical tip: A detailed closing checklist is the single best tool to avoid last-minute chaos.
10) Step 9 — The First 100 Days Post-Closing (Where Many Deals Fail)
Foreign buyers should treat the first 100 days as a control and integration project:
- implement authority matrix and payment controls,
- lock down bank access and approvals,
- establish monthly reporting pack (P&L, cash, bank movements),
- finalize outstanding consents and registrations,
- review tax/SGK compliance calendar,
- remove informal related-party practices,
- secure IP assignments and documentation,
- set internal controls and audit rhythm.
This is how you prevent post-closing “surprises” from becoming expensive disputes.
FAQ
Can foreigners buy a company in Turkey?
Yes, generally. However, some sectors have licensing or regulatory requirements and practical documentation steps that should be assessed early.
Is a share deal or asset deal safer in Turkey?
It depends. Asset deals can reduce historical liability exposure, but can create VAT and transfer complexity. Share deals are common for continuity, but require stronger warranties, indemnities, and escrow.
What are the best protections against tax surprises?
Strong tax due diligence + tax warranties + specific indemnities + escrow/holdback aligned with risk timelines.
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