Meta Description: A comprehensive legal guide to technology M&A in Turkey, covering software ownership, source code, SaaS contracts, intellectual property, founders, employees, open-source software, cybersecurity, personal data, cloud infrastructure, Competition Authority clearance and post-closing integration.
Introduction
Acquiring a technology company is fundamentally different from acquiring a traditional manufacturing or asset-heavy business.
A manufacturing company may derive much of its value from factories, machinery, inventory and real estate. A technology company may own very few physical assets while being worth millions of euros because of its software, algorithms, customer database, recurring subscriptions, brand, employees and intellectual property.
This creates a different set of legal questions for an investor.
Who actually owns the source code? Did founders develop the software before the company was incorporated? Have freelance developers assigned their intellectual property rights? Does the business depend on open-source code that restricts commercial use? Can customer contracts be transferred or maintained following a change of control? Are cloud infrastructure licences transferable? Has customer data been processed lawfully? Can personal data continue to be transferred to foreign servers after closing?
These questions may determine whether the buyer is acquiring a functioning technology business or merely shares in a company that uses technology legally owned by someone else.
Technology acquisitions in Turkey are therefore particularly dependent on legal due diligence.
The transaction should be examined under the Turkish Commercial Code, intellectual property legislation, Turkish Code of Obligations, Personal Data Protection Law No. 6698 (“KVKK”), competition legislation and, depending on the business model, sector-specific regulation.
Why Technology M&A Requires Different Due Diligence
Traditional legal due diligence often begins with corporate records, contracts, employment, litigation and real estate.
These areas remain relevant in technology acquisitions, but they may not reveal the target’s principal risks.
A technology buyer must understand the legal architecture underlying the product.
For a SaaS company, for example, value may depend on a chain including the company’s proprietary code, third-party libraries, hosting provider, payment infrastructure, customer agreements and employee-developed improvements.
If one component of that chain is legally defective, the entire commercial model may be affected.
A buyer therefore needs to answer a fundamental question:
Does the target company legally control everything necessary to continue providing its technology product after closing?
The answer cannot be established solely by reviewing the company’s balance sheet.
Software Ownership Is the Starting Point
A Turkish technology company may describe itself as the “owner” of its software, but this statement should be verified.
Software may have been developed by founders before incorporation.
It may have been created by employees, consultants, freelancers or external software companies.
Different modules may have different ownership histories.
A company may have paid a developer for software development without obtaining a sufficiently clear assignment of the relevant economic rights.
The buyer should therefore reconstruct the development history of the principal technology product.
The review should identify when development began, who developed each major component, which contracts governed the work and whether the company received the rights required to exploit, modify and commercialise the software.
Founder-Owned Technology
Founder ownership is one of the most common issues in early-stage technology acquisitions.
Imagine that two developers create an application in 2019.
The company is incorporated in 2021.
The founders then continue improving the same code through the company.
Commercially, everyone may treat the software as belonging to the company.
Legally, however, the company’s ownership of the pre-incorporation code should not simply be assumed.
An investor may require the founders to execute an intellectual property assignment before closing.
This may be made a condition precedent to the acquisition.
For an investor, acquiring 100% of the shares while leaving the principal technology legally owned by a founder would represent an obvious and avoidable transaction risk.
Employee-Developed Software
Employees may continuously develop source code, technical documentation, databases and other intellectual property.
The buyer should review employment agreements and internal intellectual property policies.
Particular attention should be given to senior developers, product managers and technical founders.
The legal analysis should consider whether the company holds sufficient rights over works produced within the employment relationship and whether contractual provisions appropriately address inventions, software, confidentiality and post-employment obligations.
Where ownership is uncertain, confirmatory assignments may be obtained before closing.
Freelancers and Independent Developers
Freelance development creates greater risk.
A start-up may initially hire individual developers through informal arrangements because it lacks funding for full-time employees.
The parties may communicate through email or messaging applications and payment may be made monthly without a comprehensive software development agreement.
Years later, the company may raise institutional investment or be sold.
The buyer then asks:
Where is the agreement proving that the company owns the code?
If no valid assignment exists, the freelancer may retain rights that materially affect the company’s ability to exploit the software.
Technology companies preparing for M&A should therefore identify historical contributors before the due diligence process begins.
Source Code Due Diligence
Ownership alone is not enough.
A buyer should understand whether the source code actually exists in a form that can be controlled and maintained.
The review may involve technical advisers examining repositories, development environments, access rights and dependencies.
Legal counsel should determine who has administrator access and whether third parties can disable important systems.
A founder should not remain the only person holding credentials for the principal code repository after closing.
The acquisition should ensure that the target or buyer has complete access to the relevant development infrastructure.
Open-Source Software
Very few modern technology products are written entirely from proprietary code.
Developers frequently use open-source libraries and frameworks.
Open-source use is not inherently problematic. It can significantly improve development efficiency.
The legal issue is whether the company complies with the licence applicable to each component.
Some licences impose relatively limited obligations. Others may require attribution, publication of modifications or, depending on how software is incorporated and distributed, disclosure or licensing of derivative source code.
A target claiming that its software is entirely proprietary should therefore be tested against an open-source software scan where the technology is commercially significant.
An undisclosed licence obligation can materially affect a buyer that intends to keep the source code proprietary.
Third-Party Software Licences
Technology companies also depend heavily on proprietary third-party software.
Examples may include database systems, analytics tools, cybersecurity products, development environments and enterprise software.
The buyer should determine whether those licences remain valid following the transaction.
Important questions include whether the licence is transferable, whether a change of control requires consent, whether pricing changes after the acquisition and whether the licence permits use throughout the buyer’s corporate group.
A technology product may depend on a relatively inexpensive licence that becomes significantly more expensive once the target joins an international group.
SaaS Businesses and Recurring Revenue
Software-as-a-Service companies are frequently valued according to recurring revenue rather than traditional asset values.
Metrics such as Annual Recurring Revenue and Monthly Recurring Revenue can materially influence purchase price.
The legal due diligence must therefore test whether the underlying revenue is genuinely recurring.
A buyer should examine customer contracts to understand termination rights, renewal mechanisms, minimum commitments, pricing, service-level obligations and customer concentration.
A company may commercially describe a contract as a three-year subscription while the legal agreement permits the customer to terminate at any time on thirty days’ notice.
The distinction can significantly affect valuation.
Customer Concentration
A technology company may generate a large proportion of its revenue from a small number of customers.
This is primarily a commercial issue, but contract terms determine the legal risk.
If 40% of annual revenue comes from three customers, the buyer should know whether those customers can terminate following the acquisition.
Change-of-control provisions should therefore be identified during due diligence.
Where a critical customer has a consent right, obtaining consent may become a condition precedent.
Standard Customer Terms
Fast-growing technology companies sometimes operate through multiple generations of customer contracts.
Early customers may have signed individually negotiated contracts.
Later customers may accept online terms.
Enterprise clients may use their own procurement templates.
As a result, the target may have materially different liability, intellectual property and termination obligations across its customer base.
The buyer should not assume that the latest standard terms apply to every customer.
Legacy agreements may contain unlimited liability, unusual service commitments or broad customer ownership rights over technology developments.
Service Level Agreements
SaaS and cloud businesses frequently provide contractual service levels.
These may guarantee availability, response times or technical support.
Failure to meet agreed service levels may result in credits, termination or damages.
The buyer should examine whether historical system performance has complied with contractual requirements.
A target reporting no formal litigation may still have substantial accumulated customer dissatisfaction caused by recurring outages.
The legal and technical due diligence teams should therefore exchange information.
Intellectual Property Created for Customers
Technology companies sometimes customise products for large clients.
This may create uncertainty over who owns the resulting developments.
A customer agreement may provide that the client owns bespoke modifications.
Another agreement may grant the client a broad perpetual licence.
The technology company may nevertheless have incorporated parts of those modifications into its general product.
This can create a chain-of-title problem.
The buyer should identify whether any customer has rights capable of restricting the target’s future use of material technology.
Trademark and Brand Ownership
Software companies frequently focus heavily on source code while neglecting trademark protection.
The target’s commercial brand, product names, logos and domain names should therefore be reviewed separately.
The buyer should verify that registrations are in the company’s name rather than in the name of a founder, marketing agency or related company.
International technology companies should also consider whether trademark protection exists in the jurisdictions in which they operate or plan to expand.
Acquiring the Turkish trademark alone may be insufficient where the target derives substantial revenue from foreign markets.
Domain Names and Digital Accounts
Technology assets include more than formal intellectual property registrations.
The buyer should identify control over domain names, application stores, developer accounts, social-media accounts, cloud platforms and digital advertising accounts.
These accounts may have been opened personally by founders.
A company might technically own its trademark while the founder personally controls the domain and mobile application publisher account.
Such arrangements should be corrected before closing.
Operational control should be transferred together with legal ownership.
Cloud Infrastructure
A modern SaaS business may operate almost entirely through external cloud infrastructure.
The target may use providers for hosting, storage, backups, content delivery, analytics and security.
The acquisition team should understand where critical data and applications are hosted, which entity contracts with the provider and whether accounts can remain operational after closing.
The target’s dependency on a single provider may also constitute an operational risk.
The buyer should assess business continuity arrangements, backups and exit rights.
Cybersecurity Due Diligence
Cybersecurity has become a core M&A issue.
A data breach discovered after closing may result from security weaknesses that existed for years before the acquisition.
Technology due diligence should therefore investigate previous cybersecurity incidents, penetration testing, access controls, administrator rights, incident-response procedures, backups and third-party vulnerabilities.
A seller may warrant that no material cybersecurity incident has occurred.
However, the company’s ability to know whether an incident occurred is itself important.
A company with no monitoring infrastructure may confidently state that it has never suffered a breach simply because it was incapable of detecting one.
Cybersecurity Representations and Warranties
Technology SPAs often contain specialised warranties concerning IT and cybersecurity.
These may cover ownership or valid licensing of systems, absence of material security incidents, reasonable security measures, data backups and business continuity.
Known vulnerabilities should not be handled solely through a general warranty.
The buyer may require remediation before closing or a specific indemnity where an identified incident remains unresolved.
Personal Data as a Transaction Asset
Technology companies frequently hold large quantities of personal data.
Depending on the business, this may include customer identity information, location information, transaction history, employee data, user behaviour and marketing profiles.
The commercial value of a customer database does not mean it can be processed without legal restrictions.
Turkey’s Personal Data Protection Law regulates the processing and transfer of personal data and imposes obligations on data controllers and processors. (KVKK)
A buyer should therefore investigate whether the target’s data has been lawfully collected and whether it can continue to be used for the purposes assumed in the valuation.
Privacy Notices and Processing Grounds
The buyer should examine how the target informs users and on what legal basis personal data are processed.
The review should consider whether privacy notices reflect actual data practices.
A company may state publicly that personal data are used only to provide a service while internally using the same information for extensive profiling or unrelated marketing.
Such inconsistencies may create regulatory risk.
Historical compliance should be reviewed before customer databases are integrated into the buyer’s systems.
Cross-Border Data Transfers
Cross-border technology transactions frequently create immediate international data-transfer issues.
The buyer may want to migrate employee or customer data from Turkish systems to a global cloud environment.
Article 9 of the KVKK was materially amended in 2024. Under the current framework, cross-border transfers can be based on an adequacy decision or, where the statutory conditions are satisfied, appropriate safeguards and other mechanisms provided by the legislation. (KVKK)
The Turkish Data Protection Authority has also published a regulation governing cross-border transfers and official standard contract texts covering controller-to-controller, controller-to-processor, processor-to-processor and processor-to-controller transfers. (KVKK)
A buyer should therefore not wait until post-closing IT migration to consider international data transfers.
Data Rooms and Personal Data
Personal data issues begin even before the acquisition closes.
A virtual data room may contain employee files, customer information and management records.
Not every document should be uploaded in unredacted form.
The transaction team should apply data minimisation.
Sensitive employee or customer information may be redacted or anonymised where the buyer does not need individual identity to conduct due diligence.
Where the buyer is foreign, international data-transfer implications should also be assessed at the due diligence stage.
Fintech and Regulated Technology Businesses
A company calling itself a “technology company” may in reality conduct a regulated financial activity.
Fintech businesses may operate in areas such as payment services, electronic money, financial infrastructure or technology supplied to regulated institutions.
The acquisition team should therefore determine whether the target itself holds regulatory authorisation and whether a change of ownership requires prior approval or notification.
The same principle applies to technology companies operating in other regulated sectors.
A health-tech platform, aviation software business or telecommunications company may face regulatory requirements that do not apply to an ordinary SaaS company.
The commercial label “technology company” does not determine the regulatory regime.
Artificial Intelligence Businesses
Artificial intelligence acquisitions create additional due diligence questions.
A buyer should understand the origin of training data, third-party models, software licences and datasets used to develop the product.
The company may rely on external AI providers through APIs rather than owning the core model itself.
This is commercially legitimate, but it affects valuation.
The buyer should distinguish between proprietary technology and technology that effectively functions as an interface built on third-party infrastructure.
Customer claims concerning ownership of AI-generated output and contractual restrictions imposed by model providers should also be considered.
Data Used to Train AI Models
Training data can create significant legal exposure.
The company should be able to explain where the data originated and what rights allow it to use those data.
Personal data, copyrighted material, customer-confidential information and scraped datasets may each raise different legal questions.
A broad representation that the target “owns all AI technology” does not answer whether the underlying training process was legally sustainable.
Technology and legal due diligence should therefore be combined.
Key Developers and Employee Retention
In many technology acquisitions, the principal asset walks out of the office every evening.
A small number of developers may understand the architecture better than anyone else.
The buyer should therefore identify key personnel before closing.
Retention arrangements may involve management incentives, bonuses, options or continued founder equity.
The acquisition should also assess whether key employees have enforceable employment arrangements, confidentiality obligations and appropriate intellectual property provisions.
Purchasing a software company and losing the entire senior engineering team immediately after closing can materially reduce the value of the transaction.
Founder Vesting and Rollover
Technology acquisitions frequently involve founders retaining an ownership interest after closing.
A buyer or private equity investor may acquire 70% while founders retain 30%.
The retained shares align founders with future growth.
Shareholders’ agreements may include vesting, good-leaver and bad-leaver mechanisms, call options and future exit obligations.
These arrangements should be adapted to Turkish corporate law rather than copied mechanically from foreign venture capital documentation.
A contractual obligation to transfer shares must ultimately be implemented through the formal rules applicable to the relevant Turkish company type.
Employee Stock Options
Technology companies frequently promise equity to employees.
A buyer should identify both formally issued shares and informal equity promises.
An employee may have an email stating that they are entitled to “1% of the company” even though no legally valid share issuance has occurred.
Such promises can create contractual claims and complicate the cap table.
Due diligence should therefore investigate options, phantom shares, bonus rights, convertible instruments and other equity-linked arrangements.
A buyer needs to know the fully diluted ownership structure rather than only the shareholders appearing in the current share ledger.
Venture Capital Documents
Technology targets may have completed several funding rounds.
The corporate documentation may therefore contain preferred economics, investor consent rights, liquidation preferences, anti-dilution arrangements, information rights and exit provisions.
An acquisition must determine how these rights operate on a sale.
Some investors may have preferential entitlement to sale proceeds.
Others may have consent rights that affect closing.
The buyer should therefore examine all investment and shareholders’ agreements, not merely the latest corporate registry records.
Liquidation Preferences and Acquisition Proceeds
A headline offer of EUR 20 million does not necessarily mean founders receive EUR 20 million according to their ordinary ownership percentages.
Previous investors may hold contractual or corporate preference rights.
For example, an investor may be entitled to recover its investment before remaining proceeds are distributed.
The sale process should calculate the shareholder proceeds waterfall before signing.
Otherwise, shareholders may discover at closing that their expectations concerning the sale proceeds are inconsistent with existing investment documents.
Drag-Along Rights
Technology companies with numerous venture investors and employee shareholders frequently depend on drag-along rights for an eventual sale.
A buyer seeking 100% ownership will not want to negotiate separately with dozens of small shareholders.
The seller should therefore establish whether existing transaction documents provide a workable mechanism requiring minority holders to participate in the sale.
The validity and implementation of the mechanism should be examined under Turkish corporate law.
Competition Authority and Technology Acquisitions
Technology M&A requires particular attention under Turkey’s merger-control framework.
In February 2026, the Turkish Competition Authority substantially updated the general turnover thresholds. The individual Turkish turnover threshold increased from TRY 250 million to TRY 1 billion, the combined Turkish turnover threshold from TRY 750 million to TRY 3 billion and the relevant worldwide threshold from TRY 3 billion to TRY 9 billion. (Rekabet Kurumu)
Technology transactions are also subject to a special regime.
The 2026 amendments narrowed the “technology undertaking exception” to technology undertakings established in Turkey and introduced a TRY 250 million individual turnover threshold for transactions involving such undertakings under the special mechanism. (Rekabet Kurumu)
This is particularly relevant because technology companies may have relatively low current turnover while having high valuations and significant future competitive importance.
What Counts as a Technology Undertaking?
The technology undertaking analysis should be conducted under the current merger-control rules and Competition Authority guidance rather than based merely on whether the company calls itself a start-up.
Technology businesses operating in software, digital platforms, financial technologies, biotechnology and related sectors may require closer examination under the applicable definition.
The Competition Authority updated its merger and acquisition guidelines in May 2026 following the February amendments. (Rekabet Kurumu)
Transaction parties should therefore conduct Turkish merger-control analysis before signing rather than relying on thresholds used in an earlier funding round.
Acqui-Hires
Some technology acquisitions are economically driven more by employees than by products or revenue.
These are sometimes referred to as acqui-hires.
A buyer may primarily want the target’s engineering team.
The transaction nevertheless remains an acquisition of a company or business and should not assume that employees automatically become bound to remain.
Employment relationships and employee consent issues should be analysed separately from the share acquisition.
Retention incentives may be more important than traditional asset warranties.
Purchase Price Mechanisms for Technology Companies
Technology valuations can be highly sensitive to growth assumptions.
Parties may therefore use earn-outs or deferred consideration to bridge valuation disagreements.
Metrics might include recurring revenue, number of enterprise customers or specified product milestones.
The agreement should define the metric precisely.
An earn-out based simply on “ARR” is inadequate unless the SPA determines how ARR is calculated, how discounts are treated, how churn is reflected and whether related-party or acquired revenues count.
A technology earn-out can become a major post-closing dispute if the financial definition does not match the company’s actual subscription model.
Representations and Warranties
Technology acquisitions usually require a warranty package tailored to the target’s actual business model.
Particular attention should be given to ownership and licensing of software, infringement claims, open-source compliance, customer agreements, data protection, cybersecurity, employee and contractor IP assignments, third-party infrastructure and regulatory compliance.
General M&A warranty language may not sufficiently protect a buyer acquiring a software-intensive business.
For example, a generic warranty that the target owns its “material assets” may be considerably less useful than a specific representation concerning ownership of source code and absence of undisclosed open-source obligations.
Specific Indemnities
Where technology due diligence identifies a concrete risk, a specific indemnity may be more appropriate than a general warranty.
Examples might include an ongoing data protection investigation, a material software ownership dispute, historical use of unlicensed software or an unresolved cybersecurity incident.
The buyer may require the issue to be corrected before closing.
Where correction is impossible, the seller may remain economically responsible for losses through an indemnity supported by escrow or retention.
Warranty and Indemnity Insurance
W&I insurance may be considered in larger technology transactions, particularly private equity exits.
However, insurers generally expect professional due diligence.
Known problems are often excluded.
A buyer cannot normally discover an obvious intellectual property ownership defect and then expect a general W&I policy to absorb the risk.
Identified technology risks must therefore be addressed separately.
Post-Closing Technology Integration
Closing does not complete the legal technology integration process.
The buyer may need to migrate email, source-code repositories, cloud hosting, cybersecurity systems, CRM platforms, customer databases and employee systems.
Integration should be planned before closing.
Particular care should be given to access rights.
Former founders or consultants should not retain administrator privileges unless intentionally required during a transition.
At the same time, immediate removal of all founder access may disrupt a platform if knowledge transfer has not occurred.
Transitional Technology Services
A carve-out technology acquisition may depend temporarily on the seller’s systems.
The seller may provide hosting, cybersecurity, accounting, developer tools or office infrastructure under a Transitional Services Agreement.
The TSA should define service levels, data access, cybersecurity obligations, migration responsibilities and termination dates.
Technology transition periods should reflect operational reality.
Migrating a complex platform may require significantly more time than changing corporate ownership records.
Technology M&A and Transaction Value
Technology companies illustrate why legal due diligence can directly affect purchase price.
An investor may initially value a SaaS business at EUR 30 million.
Due diligence may then reveal that the company does not own a critical software module, its three largest customers can terminate immediately following a change of control, or its principal database cannot lawfully be migrated to the buyer’s foreign infrastructure.
Each issue affects value.
The strongest technology M&A process therefore does not treat legal due diligence as merely a compliance exercise.
It uses legal findings to test the assumptions supporting the valuation.
Practical Technology M&A Checklist
Before acquiring a Turkish technology company, a buyer should generally:
- Confirm ownership of all material source code and software.
- Review founder, employee and contractor IP assignments.
- Conduct an open-source software review.
- Identify material third-party technology licences.
- Review source-code repositories and administrator access.
- Analyse SaaS customer contracts and recurring revenue terms.
- Identify customer concentration and change-of-control rights.
- Verify trademarks, domain names and digital platform accounts.
- Map cloud providers and critical technology dependencies.
- Conduct cybersecurity due diligence.
- Review historical security incidents.
- Analyse KVKK compliance and customer data processing.
- Review international data-transfer arrangements.
- Investigate AI training data and third-party models where relevant.
- Identify key developers and retention risks.
- Determine founder rollover, vesting and management incentives.
- Review option plans and the fully diluted cap table.
- Analyse venture capital preference and exit rights.
- Conduct Competition Authority analysis under the 2026 technology undertaking rules.
- Prepare a detailed post-closing technology and data migration plan.
Conclusion
Technology M&A in Turkey requires investors to look beyond corporate ownership and financial statements.
The most valuable assets may consist of source code, data, contractual recurring revenue and the knowledge of a small number of employees. The buyer must therefore establish that these assets are legally controlled by the target and can continue to be used after ownership changes.
Software developed by founders and freelancers should be examined for chain of title. Open-source and third-party licences should be reviewed. SaaS contracts must be analysed to determine whether projected recurring revenue is legally sustainable. Cybersecurity and personal data compliance must be integrated into legal due diligence rather than treated as purely technical issues.
Data protection has become particularly important for cross-border technology acquisitions. Article 9 of the KVKK now provides a revised framework for international transfers, while the Data Protection Authority has issued regulations and standard contractual mechanisms for compliant transfers abroad. (KVKK)
Merger control also requires special attention. Turkey substantially increased its general notification thresholds in February 2026, while simultaneously narrowing the technology undertaking exception to technology undertakings established in Turkey and introducing a TRY 250 million individual threshold under the special framework. (Rekabet Kurumu)
For investors, the central question is therefore not simply whether the company legally owns its shares, employees and bank accounts.
It is:
Does the target legally control the technology, data, contractual relationships and human expertise from which its valuation is derived—and will those assets remain usable after closing?
A properly structured technology acquisition answers that question before the purchase price is paid.
This article provides general information on Turkish law and does not constitute legal, regulatory, technology, cybersecurity, investment or tax advice. Each technology M&A transaction should be assessed according to the target’s software architecture, intellectual property, customer contracts, data processing activities, employee structure, regulatory status and transaction value.
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