A thorough & proper investigation of all legal, financial & tax issues is an integral part of DD of M&A transactions in Turkey. Sometimes, commercial DD is performed as well, especially when it comes to M&A deals in more niche industries. Social, environmental & management DD is also becoming more common due to the growing interest of international financial institutions in the Turkish M&A market.
DD of M&A transactions in Turkey usually covers:
- proper registration;
- legal status;
- corporate governance;
- terms of agreements, including lease & credit ones;
- key suppliers & distributors;
- employee-related issues;
- IP & real property;
- physical assets;
- permits & licenses;
- compliance with the law.
Those considering registering a private company in Turkey should keep in mind that sellers don’t often provide potential buyers with DD reports. However, prospective buyers often receive comprehensive information if an M&A consultant is hired by the seller.
DD can be particularly helpful to individuals considering acquiring a stake in a Turkish company. It can also help banks by providing them with the information they need to to extend a loan for the acquisition.
By performing DD of a target company in Turkey, potential buyers can obtain information on issues that can adversely affect the outcome of an upcoming transaction. Also, by determining the target company’s strong & weak points, potential purchasers can identify risks & have stronger positions during negotiations.
Liability for Statements
Those considering acquiring a Turkish private company should keep in mind that the seller is usually responsible for any pre-contractual misstatements, regardless of any restrictions that may be included in the agreement.
Publicly Available Information
Concluding an M&A transaction in Turkey requires potential purchasers to file applications with commercial registers of subnational jurisdictions they reside in. Each of the commercial registers contains information that’s available to the general public. However, they all have their own methods of maintaining & providing such information; therefore, the speed & ease with which it’s obtained may vary from jurisdiction to jurisdiction. Those considering obtaining ownership of Turkish real estate should keep in mind that some Turkish government agencies also maintain public records on private companies.
The following information about Turkish private companies is publicly available & often sought during preliminary DD:
- field of activity;
- capital amount;
- changes in equity;
- previous & current stakeholders;
- BoD’s previous & current members;
- decisions made by the BoD & general meeting;
- TM- & patent-related information.
Information about court cases in which a private company is a party, including court decisions concerning a private company, isn’t considered public in Turkey.
The fact that the buyer knew of the distorted / undisclosed terms at the time of concluding an M&A deal in Turkey doesn’t allow them to file a lawsuit against.
Conducting legal DD of private M&A transactions in Turkey helps potential purchasers analyze the target company’s activities from a legal standpoint & obtain information about potential risks. IQ Decision UK experts can provide you with legal advice on minimizing existing & potential risks in the activities of a Turkish company, as well as provide assistance with conducting DD of a business in Turkey.