What is due diligence for?
Buying a company means buying its past: the lawsuits, the tax history, the contractual burdens and whatever has been kept off the books. Legal due diligence makes that past visible. The aim is not to find a perfect company but to set the price and the contract against what is actually there.
Practical guidance
Before the data room is opened, the confidentiality agreement and clean-team rules must be clarified; in deals between competitors, information sharing can run into competition law.
Let us review the target company together
From due diligence to closing, an M&A team that reports on transaction security in two languages.
Scope: eight core modules
A typical review runs to eight modules: corporate structure and share history; material contracts and change-of-control provisions; the litigation and enforcement portfolio; employment law and payroll compliance; tax and incentives; real estate and permits; intellectual property; and KVKK and data security. In regulated sectors — energy, healthcare, finance — a regulatory module is added.
Typical red flags in Turkish files
The ones we see most often: gaps in the share ledger and the general assembly records; off-payroll payment practices and the severance liability that comes with them; expired licences and permits; undocumented related-party transactions; transfer restrictions in customer contracts; KVKK compliance gaps, which by now are close to standard; and minimum-capital compliance with its 31/12/2026 deadline — a target whose capital is below the amounts in TTK arts. 332 and 580 is deemed dissolved under TTK provisional art. 15 if it does not increase its capital in time. Every one of these can be dealt with if it is structured correctly, provided it is known before closing.
From finding to contract
A report is worth what makes it into the share transfer agreement: price adjustments, escrow and holdback structures, specific indemnity items for a particular tax risk, conditions to be remedied before closing, and the representations-and-warranties matrix. The line between “known risk” and “unknown risk” is the backbone of the indemnity architecture.
The Competition Authority and other approvals
Where the parties’ turnovers exceed the notification thresholds, Competition Authority approval has to be in hand before closing; closing without it (gun-jumping) carries serious penalties. Sector-specific approvals (EPDK, BDDK and the like) and the E-TUYS notification belong in the timeline from the start.
Representations, warranties and indemnity architecture
Findings turn into contract in two places: the representations and warranties matrix, and the indemnity provisions. The practical balance is struck across four parameters. Thresholds — de minimis and basket — filter out small claims. The cap is, in most transactions, a percentage of the price, rising to the full price for fundamental warranties. Time limits run 12-24 months for general warranties, with longer periods for tax and social security that track the statute of limitations. The knowledge exception moves risks disclosed in the data room out of the general warranties and ties them to specific indemnity instead. Escrow or a bank guarantee covers the risk that the seller cannot pay. Every part of this architecture feeds off the due diligence findings: a weak report makes for a weak contract.
Signing to closing: the period everyone forgets
The period between signing and closing is the most delicate phase of the transaction. While Competition Authority approval is awaited, interim covenants keep the target company inside its ordinary course of business — and in transactions between competitors the prohibition on early integration (gun-jumping) has to be observed at the same time. The closing conditions (MAC/MAE clauses, regulatory approvals, third-party consents) need to be drafted clearly, and the closing mechanics — payment flow, share transfer documents, management changes, the E-TUYS notification — run to a minute-by-minute plan. For the employment-law side of post-closing integration, our employment law guide is a useful reference.
The Köksal approach
Our Mergers and Acquisitions focus area runs the transaction from review to closing in two languages, under a single project plan. Our due diligence service builds the bridge from finding to contract, and in cross-border transactions the Germany and Global Desk coordinate the local components. For anyone weighing market entry by incorporation instead, our incorporation guide offers a basis for comparison.
Conclusion
Good due diligence looks expensive; bad surprises are more expensive. Disciplined review, the experience to translate findings into the contract, and discipline between signing and closing are the real insurance on an acquisition.
