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MERGERS & ACQUISITIONS UNDER TURKISH LAW

Despite all negative conditions, Turkey is still attractive to investments and continues to be receptive to the foreign economies. As a result of this, relation with foreign companies continue to increase and this has its reflections in the area of mergers and acquisitions.

Turkish parties of these mergers and acquisitions institutions as parts of the transactions for the first time and they are not familiar with the process. But still, Competition Board announced that the %56 of the board decisions are related to merger and acquisitions in 2017. The merger and acquisition transactions are complex and not easy for anyone to conduct. It requires a well-organized teamwork.

Steps in the Mergers and Acquisitions Process

  • Pre-Negotiations

The acquirer makes contact with one or more companies that meet its search criteria and appear to offer good value; the purpose of initial conversations is to get more information and to see how amenable to a merger or acquisition the target company is.

In this step also involves assessing the value of the target, identifying alternatives for structuring the merger or acquisition transactions, evaluating these, and selecting the structure that would best enable the organization to achieve its objectives, and developing an offer.

  • Start Negotiations

After producing several valuation models of the target company, the acquirer should have sufficient information to enable it to construct a reasonable offer; once the initial offer has been presented, the two companies can negotiate terms in more detail. And also sign an NDA. An NDA (non-disclosure agreement) creates a confidential relationship between the parties to protect any type of confidential and proprietary information or secrets. In this step also involves signing Mou/Loi ( Memorandum of understanding/ Letter of intent)

  • Due Diligence

After producing several valuation models of the target company, the acquirer should have sufficient information to enable it to construct a reasonable offer. Due diligence step is conducted by the acquirer to define legal and economic status and target company’s operations – its financial metric, assets and liabilities, customers, human resources, etc. The acquirer must ensure a complete and comprehensive due diligence review of the target entity in order to understand the opportunities and risks associated with the transaction.

  • Purchase and Sale Contracts

Assuming due diligence is completed with no major problems, the next step is executing a final contract for sale. The parties negotiate definite agreements, whether it is to be an Asset Purchase or Share Purchase. One of this agreement is Shareholder Agreement which is regulating the relationship between the existing shareholders and the new shareholder.

  • Official Permissions

Authorizations and approvals may be required to be obtained from the relevant official bodies. ( Such as direct foreign investments)

  • Closing

It is the last stage of a merger and acquisitions. The acquisition deal closes, and management teams of the target and acquirer work together on the process of merging two firms.