Acquiring a Company in Türkiye: A Guide for Foreign Investors

Acquisitions in Türkiye are usually structured as either a share deal or an asset deal, and the process runs from a letter of intent through due diligence, negotiation, any required regulatory clearances, closing and integration. For foreign investors, the decisive factors are rarely the legal mechanics. They are an accurate reading of the target’s financial reality and, particularly with family-owned businesses, an early understanding of what the seller actually wants from the transaction. This guide sets out the essential framework for investors considering a Turkish acquisition.

Why do foreign investors acquire companies in Türkiye?

Türkiye combines a large domestic market, a young population, established manufacturing and export capability, and a position between Europe, the Middle East and Central Asia. For a foreign investor, an acquisition offers faster market entry than a greenfield build, along with an existing customer and supplier network, a trained workforce and an established brand.

As a general principle, Turkish law treats foreign investors on a footing comparable to domestic investors. Some regulated sectors, however, such as banking, energy, media, aviation and defence, can involve special approvals, notifications or ownership limits. Sector-specific rules should therefore be reviewed at the outset.

Share deal or asset deal?

The choice of structure affects risk allocation, tax outcomes and the process itself. It should be made in light of the target’s profile, its liabilities and the buyer’s objectives.

In practice, share deals are more common. Where there is uncertainty about the target’s historical liabilities, an asset deal or a hybrid structure may be considered. In either structure, the transfer of employees, the transfer of licences and permits, and the tax consequences need separate analysis.

What are the stages of an acquisition?

1. Preparation and target selection: define the investment thesis, the target profile and the valuation framework.
2. First contact and letter of intent: discussions begin under a confidentiality agreement; a non-binding letter of intent records the price range, structure and exclusivity.
3. Due diligence: financial, tax, legal, commercial and operational review.
4. Negotiation: the share purchase agreement, price mechanism, warranties, indemnities and conditions to closing.
5. Regulatory clearances: competition and sector-regulator approvals where required.
6. Closing and transfer: payment, share transfer formalities and change of management.
7. Integration: a plan that runs from day one after closing.

The price mechanism is the centre of negotiation in most deals. Parties choose between structures that adjust for net debt and working capital at closing and those that fix value at a reference balance sheet date. Deferred consideration, earn-outs and escrow arrangements are used to bridge differences in valuation between the parties.

How are valuation and pricing approached?

Price is often the outcome of negotiation more than of valuation, but a sound valuation gives negotiation its footing. Investors typically combine discounted cash flow, trading multiples and transaction multiples. In Türkiye, the effect of inflation, interest rates and exchange rates on cash flow projections and discount rates needs careful treatment, and consistency across analyses prepared in different currencies is especially important.

Normalising the financial statements, by stripping out non-recurring items and non-arm’s-length dealings with the owners, is a frequent source of the gap between buyer and seller. An early and open dialogue on this reduces surprises late in the process.

What should due diligence focus on?

Due diligence is where the story told in the sales process is tested against evidence. In Türkiye, the following areas typically deserve particular attention:

• Financial quality: quality of earnings, working capital dynamics, the definition of net debt, and the effect of inflation accounting and exchange-rate movements on the financial statements.
• Tax: historical tax positions, transfer pricing and any exposure.
• Related-party transactions: dealings with family members or group companies that may depart from market terms.
• Employment: contracts, severance liabilities, subcontracting arrangements and pending disputes.
• Legal: licences and permits, real estate title, pending litigation, guarantees and security.
• Customer and supplier concentration: change-of-control clauses in key contracts.
• Management and governance: dependence of decision-making on founders and the maturity of internal control.

When is Competition Authority clearance required?

Mergers and acquisitions above certain size thresholds require clearance from the Turkish Competition Authority. The notification thresholds and scope are set by Competition Board communiqués and can change, so the size of the transaction and the parties’ turnover in Türkiye should be assessed against current rules early on. Where clearance is required, the transaction cannot be completed without it, which feeds directly into the closing timetable. In sectors such as banking, energy and capital markets, approvals from sector regulators may also be needed.

What are the dynamics of dealing with family businesses?

A large share of acquisition opportunities in Türkiye comes from family-owned companies. In these transactions, the decision to sell is not only financial; it often touches family history, generational transition and the founder’s legacy. The seller’s priorities may extend beyond price to the protection of employees, the continuity of the brand and the founder’s ongoing relationship with the business.

It helps foreign investors to recognise that trust takes time to build, to adopt a patient and respectful tone in discussions and to value direct access to decision-makers. The family’s decision-making mechanism, meaning whose approval is required and who takes part in the process, should be clarified at the start. After closing, involving the founder in a transition role as adviser or board member can support knowledge transfer and employee confidence.

What are the common mistakes?

• Keeping due diligence short and treating tax and employment matters superficially.
• Overlooking change-of-control provisions and required third-party consents.
• Misreading the seller’s decision structure and who the real decision-makers are.
• Starting to plan integration only after closing.
• Not reflecting the duration of the regulatory clearance process in the deal timetable.

How should post-closing integration be planned?

Value is more often created or lost in integration than at signing. The integration plan should begin during due diligence, with owners and timelines for the first hundred days covering financial reporting, treasury, information systems, human resources and retention of key employees. Giving the local management team a visible role eases cultural alignment, and introducing reporting and control standards on a phased but clearly communicated timetable establishes group discipline.

This article is for general information and is not legal, tax or investment advice; if you are evaluating an acquisition opportunity in Türkiye, we would be glad to discuss it with you at Hector Kurumsal.