For many founders, an exit is the ultimate objective of the startup journey.

A business may begin with two founders, limited capital and a simple product. After several investment rounds, the company may eventually employ hundreds of people, serve international customers and attract acquisition offers from strategic buyers, private equity funds or global technology companies.

At that point, the transaction is no longer simply about agreeing on a price.

Selling a startup requires careful coordination of:

• corporate law;
• M&A documentation;
• intellectual property;
• employment law;
• tax;
• competition law;
• personal data protection;
• commercial contracts;
• founder liabilities;
• investor rights;
• and post-closing obligations.

A poorly structured exit can create serious problems even after the founders have received the sale proceeds.

For example:

• an undisclosed tax liability may trigger an indemnity claim;
• a founder’s personal bank guarantee may survive the sale;
• employee stock options may complicate the cap table;
• intellectual property may actually belong to a freelancer rather than the startup;
• a major customer may terminate because of a change-of-control provision;
• competition authority approval may be required before closing;
• or the founders may discover that a substantial part of the purchase price depends on an earn-out they cannot fully control.

For this reason, founders should begin preparing for a possible exit long before receiving an acquisition offer.

This article explains the startup exit process in Turkey, including the principal stages of a company sale, legal due diligence, share purchase agreements, valuation mechanisms, representations and warranties, indemnities, earn-outs, escrow, competition approval, intellectual property, employee issues and the legal matters founders should consider before signing an exit transaction.

What Is a Startup Exit?

A startup exit generally refers to a transaction through which founders, investors or other shareholders realise the economic value of their shares or business.

An exit may occur through several different structures.

The most common include:

1. sale of shares to a strategic buyer;
2. sale of shares to a private equity or financial investor;
3. merger with another company;
4. sale of substantially all business assets;
5. secondary sale by founders or investors;
6. management buyout;
7. initial public offering – IPO.

For most privately held Turkish startups, the most common exit is a share sale.

In such a transaction, the buyer acquires some or all of the shares held by:

• founders;
• angel investors;
• venture capital funds;
• employees;
• or other shareholders.

If the buyer acquires 100%, the existing shareholders completely exit the company.

If the buyer acquires less than 100%, some founders or investors may remain shareholders after closing.

Share Sale and Asset Sale Are Not the Same

The first legal decision in any startup acquisition is determining what exactly is being sold.

Share Sale

The buyer acquires the shares of the company.

The company itself remains the same legal entity.

Its:

• employees;
• customer agreements;
• debts;
• licences;
• intellectual property;
• bank accounts;
• receivables;
• and commercial relationships

generally remain inside the same company.

Only ownership changes.

Asset Sale

The buyer purchases selected business assets.

These may include:

• software;
• trademarks;
• customer agreements;
• inventory;
• domain names;
• equipment;
• databases;
• or an entire business operation.

An asset sale can involve additional requirements relating to:

• transfer of contracts;
• transfer of employees;
• creditor rights;
• taxes;
• intellectual property assignments;
• licences;
• and business-transfer liability.

The distinction is critical.

Founders should not begin negotiating an acquisition price before understanding whether the proposed transaction is a share deal or asset deal.

Why Buyers Usually Conduct Due Diligence

A buyer does not normally purchase a startup solely on the basis of a pitch deck.

Before committing substantial capital, the buyer wants to confirm that the company actually owns what the founders claim it owns and that material legal risks have been identified.

This process is known as legal due diligence.

The buyer may examine:

• incorporation documents;
• articles of association;
• shareholding structure;
• shareholders’ agreements;
• investment agreements;
• cap table;
• employee agreements;
• option plans;
• customer contracts;
• supplier agreements;
• loan documents;
• intellectual property;
• licences;
• litigation;
• tax issues;
• regulatory compliance;
• personal data processing;
• cybersecurity incidents;
• and other material matters.

Due diligence is not simply a buyer-protection exercise.

It also allows founders to identify problems that should be fixed before signing the Share Purchase Agreement.

Founders Should Conduct “Vendor Due Diligence” Before the Sale

One of the most effective exit strategies is to review the company before the buyer does.

This can be called:

vendor due diligence

or

seller-side legal readiness review.

Suppose a founder expects to sell the startup within the next 18 months.

The company should investigate:

• Is the cap table correct?
• Have all investment rounds been properly documented?
• Are share transfers legally valid?
• Does the company own its software?
• Did freelancers sign copyright assignments?
• Are trademarks registered in the company’s name?
• Are employee agreements complete?
• Are key contracts signed?
• Are tax and SGK payments current?
• Are there pending disputes?
• Is KVKK compliance documented?
• Are foreign data transfers lawful?
• Are personal guarantees outstanding?
• Are option promises recorded properly?

Fixing these problems one year before an exit is significantly easier than attempting to correct them while a buyer is waiting to sign.

Step One: Review the Cap Table

A clean cap table is fundamental.

The founders should know exactly:

• who owns shares;
• how many shares each person owns;
• which class of shares they hold;
• whether privileged shares exist;
• whether employee options are outstanding;
• whether convertible instruments exist;
• whether SAFEs or convertible loans exist;
• and whether any investor has rights to acquire additional shares.

A cap table prepared in Excel is not enough if it contradicts the legal corporate records.

The legal ownership structure should match:

• the company’s share ledger;
• investment agreements;
• share certificates;
• relevant trade registry records;
• shareholders’ agreement;
• and option documentation.

Informal Equity Promises Can Become an Exit Problem

Startups frequently make informal promises such as:

“We promised our first engineer 1%.”

or:

“Our adviser is supposed to get 0.5%.”

If those promises were never properly documented, the issue may emerge during acquisition due diligence.

Imagine a company is being sold for EUR 50 million.

A former employee suddenly claims that the founder promised 2% equity.

Two percent of EUR 50 million is EUR 1 million.

An informal promise that appeared insignificant during the early startup stage can therefore become a major exit dispute.

Founders should clean up equity issues long before negotiating a sale.

Step Two: Understand Investor Rights Before Negotiating the Exit

Founders may not be free to sell the startup whenever they want.

Investment agreements and shareholders’ agreements may grant investors rights such as:

• veto rights;
• consent rights;
• drag-along rights;
• tag-along rights;
• liquidation preferences;
• right of first refusal;
• pre-emption rights;
• anti-dilution rights;
• and exit rights.

For example, an investor may have a liquidation preference stating that, upon a company sale, the investor receives its investment back before proceeds are distributed to ordinary shareholders.

This can significantly affect how much founders actually receive from the headline sale price.

Sale Price and Founder Proceeds Are Not the Same Thing

Suppose a startup is sold for:

EUR 20 million.

The founders own 60%.

A simplistic calculation might suggest:

Founder proceeds = EUR 12 million.

But the actual distribution may be affected by:

• investor liquidation preferences;
• outstanding debt;
• transaction expenses;
• option exercises;
• management bonuses;
• tax;
• escrow;
• purchase price adjustments;
• and earn-out arrangements.

Founders should therefore prepare a waterfall analysis before accepting an offer.

The key question is not:

“What is the company valuation?”

It is:

“How much cash will each seller actually receive at closing and afterwards?”

Step Three: NDA and Initial Buyer Discussions

Before providing sensitive information to a potential buyer, the parties normally sign a Non-Disclosure Agreement – NDA.

This is particularly important because a potential buyer may also be:

• a competitor;
• supplier;
• customer;
• or strategic market participant.

The NDA should regulate:

• permitted use of confidential information;
• disclosure to advisers;
• information security;
• employee access;
• return or destruction;
• non-disclosure;
• and sometimes non-solicitation.

Founders should avoid sending:

• source code;
• customer lists;
• pricing data;
• strategic plans;
• or security information

before the confidentiality framework is in place.

Step Four: Term Sheet or Letter of Intent

Once the buyer is seriously interested, the parties may sign a:

• Letter of Intent – LOI;
• Term Sheet;
• Memorandum of Understanding;
• or Heads of Terms.

This document typically outlines the principal commercial terms before a full SPA is negotiated.

It may cover:

• proposed purchase price;
• percentage of shares acquired;
• payment structure;
• earn-out;
• escrow;
• exclusivity;
• due diligence;
• expected closing date;
• founder employment;
• non-compete;
• conditions precedent;
• and transaction structure.

Many terms may be non-binding, while clauses such as:

• confidentiality;
• exclusivity;
• costs;
• governing law;
• and dispute resolution

may be binding.

Founders should therefore not sign a term sheet without legal review simply because it is labelled “non-binding.”

Exclusivity Can Materially Affect Founder Bargaining Power

Buyers often request an exclusivity period.

For example:

“For 90 days, the sellers shall not negotiate with any other potential buyer.”

This allows the buyer to conduct due diligence without fear that another buyer will complete the acquisition first.

However, exclusivity can weaken the sellers’ negotiating leverage.

Once the startup is prevented from discussing alternative offers, the buyer may attempt to:

• reduce price;
• expand warranties;
• increase escrow;
• or change other commercial terms.

An exclusivity period should therefore be:

• clearly defined;
• reasonably short;
• and linked to meaningful buyer progress.

Step Five: Legal Due Diligence

After the term sheet, the buyer commonly opens a formal due diligence process.

Documents are uploaded to a Virtual Data Room – VDR.

The legal due diligence may be organised into several categories.

Corporate

• incorporation;
• articles;
• board resolutions;
• general assembly resolutions;
• share ledger;
• investment rounds;
• share certificates;
• powers of attorney.

Finance and Debt

• bank loans;
• security agreements;
• founder loans;
• convertible debt;
• guarantees.

Commercial Contracts

• key customers;
• suppliers;
• distributors;
• resellers;
• strategic partnerships;
• SaaS providers;
• cloud contracts.

Employment

• employment agreements;
• senior management agreements;
• severance exposure;
• bonuses;
• stock options;
• confidentiality;
• non-competes.

Intellectual Property

• trademarks;
• patents;
• source code;
• software licences;
• freelancer assignments;
• copyright;
• domain names.

Regulatory

• permits;
• licences;
• sector approvals;
• competition law;
• consumer law.

Data Protection and Cybersecurity

• KVKK notices;
• processing inventory;
• VERBİS;
• cross-border data transfer mechanisms;
• security incidents;
• data breach records.

Litigation

• pending lawsuits;
• arbitration;
• enforcement proceedings;
• threatened claims.

Tax and Social Security

• tax returns;
• audits;
• SGK liabilities;
• restructuring arrangements;
• penalties.

Data Room Disclosure Must Also Respect KVKK

Due diligence does not suspend personal data protection obligations.

A company should not upload entire employee, customer or medical databases simply because a potential buyer requests “everything.”

The parties should consider:

• data minimisation;
• redaction;
• access restrictions;
• confidentiality;
• processing purpose;
• and applicable lawful processing grounds.

The Turkish Personal Data Protection Authority has specifically discussed data protection issues arising in acquisition contexts, and its decisions demonstrate that a company acquisition does not remove the requirement to process personal data lawfully.

Highly sensitive information can often be:

• anonymised;
• aggregated;
• redacted;
• or disclosed only at a later diligence stage.

Intellectual Property Is Often the Most Valuable Startup Asset

For many startups, the most valuable asset is not:

• office furniture;
• cash;
• or physical inventory.

It is the intellectual property.

A software buyer will therefore ask:

Does the startup actually own its software?

Potential problems include:

• founders created the software before incorporation;
• freelancer agreements contain no copyright transfer;
• contractors used third-party code;
• open-source obligations were ignored;
• source code belongs partly to another company;
• a trademark is registered personally in a founder’s name;
• domains belong to an employee;
• or AI-generated code creates unclear licensing issues.

These issues can significantly reduce acquisition value.

Freelancer Agreements Are Frequently a Due Diligence Weakness

Suppose a startup paid a freelance developer to build the first version of its mobile application.

The founder believes:

“We paid for the software, so the company owns everything.”

That conclusion should not be assumed without reviewing the copyright agreement.

If economic intellectual property rights were not properly transferred, the buyer may demand that the problem be corrected before closing.

The freelancer may then realise that the startup is being sold for millions and demand a substantial payment for signing the missing documentation.

This risk can be avoided by establishing proper IP ownership from the beginning.

Change-of-Control Clauses Must Be Reviewed

Even though a share sale does not usually change the company’s legal identity, commercial contracts may contain change-of-control provisions.

A major contract might state:

“If more than 50% of the Company’s voting rights are transferred, the customer may terminate this Agreement.”

Other contracts may require:

• prior consent;
• notice;
• refinancing;
• or renegotiation.

This is especially important for:

• bank agreements;
• large enterprise customers;
• licence agreements;
• distribution agreements;
• joint ventures;
• and strategic suppliers.

If the company’s largest customer can terminate immediately after the acquisition, the buyer may significantly reduce the purchase price.

Step Six: Negotiating the Purchase Price

Purchase price is not always a single fixed number.

Several mechanisms may be used.

Fixed Price

The buyer pays an agreed amount.

Example:

EUR 15 million.

Completion Accounts

The price is adjusted after closing according to:

• cash;
• debt;
• working capital;
• or other financial metrics.

Locked-Box

The purchase price is determined using historic accounts and sellers undertake not to extract value from the company between the locked-box date and closing except for agreed permitted leakage.

Earn-Out

Part of the purchase price depends on future performance.

Deferred Consideration

Part of the price is simply paid later.

Escrow

Part of the purchase price is placed in a controlled account to secure seller liabilities.

Founders should understand the risk associated with each mechanism.

Earn-Outs Can Create Major Founder Disputes

An earn-out may appear attractive because it increases the headline price.

Example:

EUR 10 million at closing.

Plus up to EUR 5 million if the startup reaches certain revenue targets within two years.

The founders may therefore announce:

“We sold the company for EUR 15 million.”

But EUR 5 million remains uncertain.

The earn-out agreement should define:

• revenue;
• EBITDA;
• customer numbers;
• calculation principles;
• accounting methods;
• permitted expenses;
• acquisition integration;
• management control;
• and dispute procedures.

The biggest problem arises when the buyer controls the company after closing.

Suppose founders receive an earn-out only if revenue exceeds EUR 10 million.

After closing, the buyer:

• changes pricing;
• redirects customers;
• reduces marketing;
• integrates the product into another entity;
• or closes one sales channel.

The founders may argue that the buyer intentionally prevented the target from being achieved.

A good SPA should therefore regulate how the buyer must operate the company during the earn-out period.

Escrow Is Different From Earn-Out

Escrow is generally used as security.

For example:

Purchase price: EUR 20 million.

EUR 18 million paid at closing.

EUR 2 million held in escrow for 18 months.

If no valid warranty claims arise, the EUR 2 million is later released to sellers.

Founders should negotiate:

• escrow amount;
• duration;
• permitted claims;
• release process;
• dispute mechanism;
• and interest.

An excessively large escrow can materially reduce the economic benefit of the exit.

Step Seven: The Share Purchase Agreement

The central document in a startup share sale is usually the Share Purchase Agreement – SPA.

The SPA may contain hundreds of provisions.

Important sections typically include:

• definitions;
• sale and purchase of shares;
• purchase price;
• payment;
• conditions precedent;
• closing;
• representations and warranties;
• indemnities;
• limitations on liability;
• confidentiality;
• non-compete;
• post-closing obligations;
• tax;
• dispute resolution;
• and governing law.

The SPA should not be viewed as an administrative form confirming the price.

It determines how substantial post-closing risks are allocated between buyer and sellers.

Representations and Warranties Are One of the Most Important Founder Risks

The buyer will usually require founders to make statements about the company.

Examples:

“The Company owns all intellectual property required for its business.”

“The Company has complied with applicable tax legislation.”

“There is no undisclosed litigation.”

“All material contracts provided to the Buyer are complete.”

“The Company has no undisclosed indebtedness.”

If one of these statements is false, the buyer may seek compensation.

Founders should therefore avoid treating warranties as “standard wording.”

Every warranty should be compared with the actual facts.

Disclosure Protects Sellers

Suppose there is an ongoing employee lawsuit.

The SPA contains a warranty:

“There are no employment disputes.”

The founder should not sign and hope the buyer never discovers the lawsuit.

Instead, the seller should disclose the litigation in the agreed disclosure mechanism.

Depending on the SPA wording, a properly disclosed matter may fall outside the warranty claim.

A founder’s strongest defence against post-closing warranty litigation is often:

accurate disclosure before closing.

Indemnities Should Be Distinguished From General Warranties

If due diligence identifies a particular risk, the buyer may request a specific indemnity.

Example:

“The Sellers shall indemnify the Buyer against all losses arising from the pending tax audit relating to fiscal year 2024.”

This allocates a known risk directly to sellers.

Founders should negotiate:

• amount;
• time limit;
• control of defence;
• settlement rights;
• recoverable losses;
• tax treatment;
• and whether the indemnity is subject to the general liability cap.

Founder Liability Should Be Limited

Sellers commonly negotiate several protections.

These may include:

Cap

Maximum aggregate seller liability.

Basket

Minimum aggregate level before claims become recoverable.

De Minimis

Minimum value for individual claims.

Survival Period

Deadline for claims.

No Double Recovery

Buyer cannot recover twice for the same loss.

Mitigation

Buyer must take reasonable steps to limit losses.

Knowledge Qualifications

Some warranties may be limited to matters actually known by specified founders.

Disclosure

Disclosed matters do not constitute warranty breaches where agreed.

These mechanisms can be worth millions of euros in a major exit.

Step Eight: Competition Authority Approval

Startup acquisitions can also be subject to Turkish merger control.

Under Competition Law No. 4054 and Communiqué No. 2010/4, acquisitions resulting in a change of control may require approval from the Turkish Competition Board where the applicable turnover thresholds are exceeded.

Turkey significantly updated the merger-control thresholds in February 2026. The Competition Authority announced that the general thresholds were increased so that the former TRY 250 million individual threshold became TRY 1 billion, the former TRY 750 million aggregate Turkey turnover threshold became TRY 3 billion and the former TRY 3 billion worldwide threshold became TRY 9 billion. The 2026 amendments also modified the special regime concerning technology undertakings.

For technology startups, competition analysis should therefore be performed early rather than assuming that a young company with relatively low revenue can never trigger merger-control requirements.

If approval is legally required, the parties should generally structure Competition Board clearance as a condition precedent to closing.

Closing a notifiable acquisition before required approval can create significant legal risk.

Competition Law Is About Control, Not Only 100% Acquisitions

Merger control can become relevant even where the buyer does not purchase every share.

For example, acquisition of:

• majority control;
• sole control;
• or joint control

may be relevant.

A minority investment may also create control depending on the governance rights granted.

Therefore, parties should analyse:

• voting rights;
• board appointment rights;
• reserved matters;
• veto rights;
• and shareholder agreements,

not merely the percentage purchased.

Step Nine: Foreign Buyers and Turkish Startups

A Turkish startup can generally be acquired by a foreign investor.

Türkiye’s Foreign Direct Investment Law is built on freedom of investment and equal treatment. Current government investment guidance confirms that international investors generally have the same rights and liabilities as domestic investors in relation to establishing companies and acquiring shares.

However, founders should separately check whether the company operates in a regulated industry.

Additional approval or notification requirements may apply to sectors such as:

• banking;
• insurance;
• payment services;
• electronic money;
• telecommunications;
• broadcasting;
• energy;
• defence;
• and other specially regulated activities.

Therefore:

foreign investor approval is generally not the same thing as sector regulatory approval.

Step Ten: Corporate Share Transfer Formalities

The closing mechanics depend on the company’s legal form.

A.Ş.

Joint stock company shares are generally more freely transferable.

The Ministry of Trade’s current company guidance states that, as a rule, general assembly approval is not required for transfer of A.Ş. shares and shareholders may freely transfer their shares, subject to applicable statutory and articles-of-association restrictions.

However, the precise procedure depends on matters such as:

• whether share certificates exist;
• whether shares are registered or bearer shares;
• applicable articles provisions;
• company approval restrictions;
• share ledger entries;
• and MKK requirements where applicable.

Closing documentation should therefore be designed according to the actual share structure.

Ltd. Şti.

Limited company share transfers involve more formal requirements.

Article 595 requires the transfer agreement and transactions creating the obligation to transfer to be made in writing and the parties’ signatures to be notarised.

Unless the articles provide otherwise, general assembly approval is required and the transfer becomes effective with that approval.

The Ministry of Trade similarly identifies written/notarised transfer documentation and, generally, general assembly approval as key elements of a limited company share transfer.

This is one reason why venture-backed Turkish startups are frequently structured as A.Ş. companies before substantial investment or exit activity.

Step Eleven: Closing Conditions

Signing and closing may occur on the same date, but major transactions frequently have a gap between them.

During that period, the parties complete Conditions Precedent – CPs.

Typical CPs may include:

• Competition Board approval;
• sector regulatory approvals;
• investor consents;
• bank consents;
• release of founder guarantees;
• amendment of articles;
• employee arrangements;
• IP transfers;
• termination of related-party agreements;
• settlement of litigation;
• restructuring of debt;
• or corporate approvals.

The SPA should specify what happens if a condition is not satisfied before the long-stop date.

Founder Guarantees Must Be Released at Closing

Founders should pay special attention to personal guarantees.

A founder may have guaranteed:

• bank loans;
• office leases;
• supplier agreements;
• credit facilities;
• company cards;
• or equipment financing.

Selling all shares does not automatically cancel those guarantees.

If the founders intend to leave the company completely, release of personal guarantees should ideally be a closing condition.

A buyer’s promise:

“We will deal with the bank later”

may not be sufficient.

The creditor itself should provide the legally necessary release.

Step Twelve: Employee and Management Issues

An acquisition can create uncertainty for employees.

The buyer may want founders and key employees to remain after closing.

Arrangements may include:

• new employment agreements;
• retention bonuses;
• management incentive plans;
• revised stock options;
• rollover equity;
• earn-out participation;
• or transaction bonuses.

Employee option plans should also be reviewed.

The SPA must determine what happens to:

• vested options;
• unvested options;
• exercised shares;
• phantom stock;
• exit bonuses;
• and employee shareholders.

An unresolved option pool can complicate the closing cap table.

Founder Employment After Exit

Founders often sell the company but continue working for one to three years.

The buyer may require them to assist with:

• integration;
• customer retention;
• product development;
• team management;
• or international expansion.

The founder should distinguish money paid as:

purchase price

from money paid as:

salary, bonus or earn-out.

These payments may have different:

• legal;
• tax;
• termination;
• and dispute consequences.

Founder Non-Compete Clauses

Buyers frequently require founders not to establish or join a competing business after closing.

A buyer paying substantial consideration for a company does not want the founders to sell the business on Friday and establish an identical competitor on Monday.

However, non-compete clauses should still be drafted carefully.

Relevant issues include:

• duration;
• geography;
• competing activities;
• founder role;
• customer non-solicitation;
• employee non-solicitation;
• and competition law.

A founder non-compete connected to the sale of a business is commercially and legally different from an ordinary employee non-compete.

The buyer’s legitimate interest in acquiring the goodwill and business value of the company should be reflected proportionately in the clause.

Step Thirteen: Closing

Closing is the stage where the transaction legally and economically completes.

Depending on the structure, closing may involve:

• payment of purchase price;
• execution of share transfers;
• delivery or endorsement of share certificates;
• share ledger updates;
• general assembly approvals;
• board resignations;
• appointment of new board members;
• signature authority changes;
• release of guarantees;
• escrow funding;
• delivery of corporate books;
• and completion of regulatory filings.

A detailed Closing Checklist should be prepared.

Founders should not rely on memory during a transaction involving dozens or hundreds of documents.

Resignation From Management Should Be Properly Completed

A founder selling all shares may also resign as:

• board member;
• manager;
• CEO;
• legal representative;
• or authorised signatory.

This should be properly documented and reflected in the relevant corporate and registry processes.

Merely sending an email saying:

“I resign”

and assuming every external record has automatically changed can create future problems.

After closing, founders should confirm termination of:

• bank authority;
• tax authority access;
• SGK authority;
• signature circular authority;
• MERSİS roles;
• and other administrative powers

where applicable.

Step Fourteen: Post-Closing Obligations

The transaction does not necessarily end economically on closing day.

Post-closing matters may include:

• earn-out calculations;
• purchase price adjustments;
• escrow release;
• tax claims;
• warranty claims;
• indemnities;
• transition services;
• founder employment;
• restrictive covenants;
• and post-closing filings.

Founders should maintain copies of important transaction records.

Once the buyer controls the company, former founders may lose access to internal systems.

If a tax or warranty dispute begins three years later, historic records may become essential.

Founders Should Negotiate Access to Records

The SPA can require the buyer and company to provide reasonable access to records required for:

• tax audits;
• litigation;
• warranty defence;
• regulatory investigations;
• or historic matters.

Otherwise, former founders may face claims concerning events that occurred while they managed the business but have no access to the documents needed to defend themselves.

D&O Insurance Should Be Considered

Board member liability can survive resignation in relation to historic conduct.

For larger transactions, founders may therefore consider whether:

• existing D&O insurance continues;
• run-off insurance is required;
• former directors remain insured;
• and who will pay for continuing coverage.

A company sale changes ownership.

It does not automatically erase claims concerning actions taken before closing.

Ten Common Startup Exit Mistakes

1. Beginning Exit Preparation Only After Receiving an Offer

Legal problems should be cleaned up earlier.

2. Having an Incorrect Cap Table

Every share, option and convertible right should be reconciled.

3. Failing to Secure IP Ownership

A buyer will not pay premium value for software the startup may not legally own.

4. Hiding Liabilities

Disclosure is generally safer than concealment.

5. Focusing Only on Headline Price

Earn-out, escrow, preferences and debt can materially reduce actual proceeds.

6. Accepting Unlimited Warranties

Founder post-closing exposure should be negotiated.

7. Ignoring Personal Guarantees

They may survive the sale.

8. Ignoring Competition Approval

The Turkish merger-control framework was materially updated in 2026.

9. Ignoring Change-of-Control Clauses

Important customers or lenders may have termination rights.

10. Failing to Plan the Founder’s Post-Closing Role

Employment, earn-out and non-compete arrangements should be clear before signing.

Startup Exit Legal Checklist

Before selling a startup in Turkey, founders should be able to answer:

1. Are we selling shares or assets?
2. What percentage is being sold?
3. Who legally owns each share?
4. Is the cap table accurate?
5. Are all share certificates accounted for?
6. Are option holders included?
7. Are SAFEs or convertible instruments outstanding?
8. What investor consent rights exist?
9. Does drag-along apply?
10. Does tag-along apply?
11. What liquidation preferences exist?
12. What will each founder actually receive?
13. Has seller-side due diligence been completed?
14. Does the company own all software?
15. Are freelancer IP assignments valid?
16. Are trademarks registered to the company?
17. Are domain names owned by the company?
18. Are important licences transferable?
19. Do key contracts contain change-of-control clauses?
20. Are customer consents required?
21. Are bank consents required?
22. Are founder guarantees outstanding?
23. Will creditors release those guarantees at closing?
24. Are tax filings complete?
25. Are SGK liabilities current?
26. Is litigation properly disclosed?
27. Are employee claims outstanding?
28. Are option plans properly documented?
29. Is KVKK compliance complete?
30. Are international data transfers compliant?
31. Has the data room been designed in accordance with privacy requirements?
32. Is competition authority approval required?
33. Do 2026 merger-control thresholds apply?
34. Is the company a technology undertaking requiring special competition analysis?
35. Does the buyer require sector regulatory approval?
36. Is the buyer foreign?
37. Are sector-specific foreign ownership rules relevant?
38. Is the price fixed or adjustable?
39. Are completion accounts used?
40. Is there a locked-box?
41. Is there an earn-out?
42. Can the buyer manipulate the earn-out?
43. Is part of the price deferred?
44. Is escrow required?
45. How long will escrow remain?
46. What warranties are founders giving?
47. Are known exceptions disclosed?
48. What indemnities apply?
49. What is the aggregate liability cap?
50. Are claims subject to a basket?
51. Is there a de minimis threshold?
52. How long do warranties survive?
53. Who controls third-party claims?
54. Who controls tax audits?
55. Are founder liabilities joint or several?
56. Must founders remain employed?
57. What happens if the buyer terminates the founder?
58. Does earn-out continue after termination?
59. Is a founder non-compete included?
60. Is its scope proportionate?
61. What happens to employee options at closing?
62. Have required corporate approvals been obtained?
63. Is a closing checklist prepared?
64. Are board resignations effective?
65. Are new directors appointed?
66. Are signature powers revoked?
67. Can founders access historic records after closing?
68. Is D&O run-off insurance required?
69. What obligations survive closing?
70. When is the exit genuinely complete?

Frequently Asked Questions About Startup Exits in Turkey

What is the most common startup exit structure in Turkey?

For privately held startups, a sale of shares to a strategic or financial buyer is one of the most common structures.

Does the company disappear when all shares are sold?

No. In a share sale, the legal entity generally continues to exist. The ownership changes.

Are A.Ş. shares freely transferable?

As a general rule, A.Ş. shares are transferable and general assembly approval is not ordinarily required, subject to applicable statutory and articles-of-association restrictions and the characteristics of the relevant shares.

Is a Ltd. Şti. share transfer more formal?

Yes. Article 595 requires a written transfer agreement with notarised signatures and, unless the articles provide otherwise, general assembly approval.

Why is due diligence necessary?

The buyer needs to verify the company’s ownership, liabilities, contracts, IP, employees, regulatory compliance and other risks before determining whether to complete the acquisition and on what terms.

Does due diligence allow unlimited access to employee and customer personal data?

No. KVKK requirements remain applicable. Companies should consider lawful basis, proportionality, minimisation, confidentiality and secure access during the data-room process.

Can a foreign company buy a Turkish startup?

Generally yes. Türkiye’s foreign investment framework is based on investment freedom and equal treatment, subject to sector-specific legislation and other regulatory requirements.

Does every startup acquisition require Competition Board approval?

No. However, qualifying changes of control that exceed current turnover thresholds may require approval. The merger-control thresholds were significantly increased in February 2026 and the technology-undertaking regime was also amended.

What are the 2026 merger-control thresholds?

The Competition Authority announced in February 2026 that the relevant general figures were increased from TRY 250 million to TRY 1 billion for the individual threshold, from TRY 750 million to TRY 3 billion for the aggregate Turkey turnover threshold and from TRY 3 billion to TRY 9 billion for the worldwide turnover threshold. The exact notification analysis must be made under the current Communiqué for each transaction.

What is an earn-out?

An earn-out makes part of the purchase price dependent on the startup achieving agreed future financial or operational targets.

Why are earn-outs risky for founders?

After closing, the buyer often controls the company and may influence the financial results used to calculate the earn-out. Operating covenants and clear calculation rules are therefore essential.

What is escrow?

Escrow usually means that part of the purchase price is held temporarily to secure possible claims such as warranty or indemnity claims.

Do founders remain liable after selling the company?

Potentially for specific matters such as contractual warranties, indemnities, personal guarantees, public debts in certain circumstances, director liability or other statutory obligations. A share sale does not automatically erase all historic personal exposure.

Can the founders compete immediately after selling?

The SPA may contain a post-sale non-compete or non-solicitation covenant. Its scope should be carefully structured according to the transaction and applicable law.

Conclusion: How Does a Startup Exit Work and What Should Founders Consider When Selling a Company?

A successful startup exit is not simply the moment when founders sign a document and receive money.

It is a multi-stage legal transaction that may begin months before signing and continue for years after closing.

The process typically moves through:

exit preparation → buyer discussions → NDA → term sheet → due diligence → SPA negotiation → regulatory approvals → closing → post-closing obligations.

Each stage can materially affect the founders’ financial outcome.

One of the most important lessons is that founders should prepare for an exit before they have a buyer.

A company with:

• clean corporate records;
• correct cap table;
• properly transferred IP;
• well-drafted employee agreements;
• valid option arrangements;
• accurate tax records;
• strong data protection compliance;
• and documented commercial contracts

can usually move through due diligence more efficiently and may obtain better transaction terms.

By contrast, a buyer that discovers legal problems has several options.

It may:

• reduce the valuation;
• require remediation;
• increase escrow;
• demand broader warranties;
• request specific indemnities;
• defer part of the price;
• or abandon the transaction entirely.

For this reason, legal readiness can directly influence startup valuation.

The transaction structure is equally important.

Founders must distinguish a share sale from an asset sale.

In a share sale, the company normally continues as the same legal entity and the buyer acquires ownership of its shares.

In an asset deal, selected business assets or an entire operating business are transferred, creating different consequences concerning liabilities, employees, contracts and regulatory approvals.

For Turkish companies, corporate form also matters.

An A.Ş. generally provides greater flexibility for share transfers and venture-backed transactions. The Ministry of Trade confirms that A.Ş. shares are, as a rule, freely transferable without general assembly approval, subject to applicable restrictions.

A Ltd. Şti. share transfer is more formal. Article 595 requires written documentation, notarised signatures and generally general assembly approval unless the articles provide otherwise.

Founders must also understand that the headline valuation is not necessarily the amount they receive.

The economic outcome can be affected by:

• investor liquidation preferences;
• debt;
• working capital adjustments;
• employee options;
• escrow;
• earn-out;
• deferred consideration;
• taxes;
• and transaction expenses.

Therefore, founders should calculate a detailed exit waterfall before agreeing to sell.

Due diligence should then be treated as a strategic process rather than merely an administrative request from the buyer.

For most technology startups, the most important diligence areas will include:

• corporate ownership;
• intellectual property;
• major contracts;
• tax;
• employment;
• investment rights;
• personal data;
• cybersecurity;
• and regulatory compliance.

Intellectual property deserves particular attention.

A technology startup whose software is worth EUR 20 million but cannot establish ownership because early developers worked without proper IP agreements may experience serious valuation problems.

Likewise, AI startups should be able to explain:

• training data;
• AI-generated code;
• third-party model licences;
• and intellectual property ownership.

Personal data must also be handled carefully during the sale.

M&A due diligence does not create an unlimited legal basis for transferring every employee and customer record to every interested bidder. The data room should be structured according to KVKK principles, including proportionality and appropriate access controls.

Regulatory review may also affect transaction timing.

The Turkish Competition Authority substantially updated its merger-control framework in February 2026, increasing the principal turnover thresholds and revising the technology-undertaking rules.

For startup acquisitions—particularly technology transactions—competition analysis should therefore be conducted before the parties commit to a fixed closing timetable.

Where the buyer is foreign, Turkish law generally permits foreign investors to acquire shares under the principle of investment freedom and equal treatment.

However, sector-specific regulatory approvals may still be required.

A fintech startup, payment company or regulated healthcare business should not assume that ordinary corporate share-transfer rules are the only applicable requirements.

The SPA then becomes the central risk-allocation document.

Founders should pay particular attention to:

• warranties;
• indemnities;
• liability caps;
• survival periods;
• escrow;
• earn-out;
• tax provisions;
• claim procedures;
• and restrictive covenants.

The founders’ objective should be to prevent an apparently successful exit from turning into years of post-closing litigation.

This means avoiding statements that are broader than the facts.

If the company has a known problem, disclosure is usually safer than concealment.

An identified tax investigation can be:

• disclosed;
• priced;
• insured;
• escrowed;
• or specifically indemnified.

A concealed investigation discovered after closing may produce:

• breach-of-warranty claims;
• fraud allegations;
• and significantly greater liability.

Founders should also ensure that personal guarantees are expressly released.

Selling 100% of the company does not automatically cancel a founder’s guarantee to:

• a bank;
• landlord;
• supplier;
• or lender.

The founder should seek an actual release from the creditor rather than merely relying on the buyer’s internal promise to replace the security.

Finally, founders should plan what happens after closing.

Will they:

• leave immediately;
• continue as executives;
• retain minority equity;
• receive rollover shares;
• remain during an earn-out;
• or provide transition services?

The answer can fundamentally affect how the SPA, employment agreement, non-compete and earn-out should be drafted.

For founders preparing a startup exit in Turkey, the central principle is therefore:

The best exit is not simply the transaction with the highest headline valuation. It is the transaction that maximises the founders’ actual proceeds while minimising the legal risks that survive closing.

A founder evaluating an offer should therefore ask not only:

“How much are they offering for the company?”

but also:

“How much will I actually receive?”

“When will I receive it?”

“What conditions must be satisfied?”

“What liabilities am I accepting?”

“How long can the buyer make claims against me?”

“Will my personal guarantees be released?”

“Can the buyer control my earn-out?”

“What happens to my employees and option holders?”

“Can I start another business after the sale?”

and

“When am I truly free from the company?”

When these questions are answered before signing, a startup exit can achieve what founders expect from it: not merely a transfer of ownership, but a legally structured and financially sustainable realisation of the value created during the startup’s growth journey.