TURKEY: An Introduction to Corporate/M&A: The Elite

General Overview of the Market

Turkey, strategically located at the crossroads of Europe and Asia, is a dynamic and diverse market that offers both opportunities and challenges for corporate and M&A transactions. Despite the economic and geopolitical uncertainties that have affected the country in recent years, Turkey remains an attractive destination for foreign investors. The country boasts a young and growing population, a strategic geographical location and a diversified economy. Key sectors attracting investment include energy, infrastructure, technology, consumer goods and healthcare. However, investors must also be cognisant of the legal and regulatory risks that may arise from Turkey’s complex and evolving business environment. Navigating these challenges requires a thorough understanding of local laws and regulations, as well as the ability to adapt to rapid changes in the market which demonstrates certain legal and financial changes each year.

On 7 January 2025, the Turkish Competition Authority released the Report prepared by the Competition Board on Mergers, Acquisitions and Privatization Transactions in 2024 (the “Report”). According to the Report, the Turkish Competition Board evaluated a total of 311 merger and acquisition transactions in 2024. The sectors that have attracted the most significant global investment during this period include: (i) computer programming, consultancy and related services, (ii) manufacturing of certain food products, (iii) payment systems and fintech, (iv) wholesale trade of agricultural raw materials and live animals, and (v) supporting activities for transportation. These sectors have emerged as key areas of focus for both domestic and international investors, reflecting broader trends and strategic interests within the Turkish M&A market. Furthermore, based on the classification by origin of the transaction parties, out of a total of 311 transactions in 2024, all parties involved were of Turkish origin in 75 transactions, while all parties were of foreign origin in 167 transactions. In the remaining transactions, at least one party was of Turkish origin and at least one was of foreign origin, indicating a mix of Turkish and foreign participants. These figures indicate a notable increase in M&A transactions compared to the previous year, reflecting a growing level of activity within the market, in 2024. The significant number of transactions involving foreign parties demonstrates the strong interest of foreign investors in the Turkish market, underscoring Turkey’s appeal as an attractive destination for international investment and signalling the continued appetite of foreign investors in the country’s economic potential.

Trends and Developments

Financial investor activity

In recent years, the Turkish M&A market has witnessed a significant rise in the participation of financial investors, particularly private equity and venture capital firms. This surge can be attributed to a combination of factors, such as Turkey’s vibrant economic landscape, ongoing efforts towards market consolidation, and the attractive prospects for high returns. Pursuant to Deloitte’s report on the Annual Turkish M&A Review 2024, financial investors were responsible for 247 transactions in 2024, representing 58% of the total M&A activity in Turkey. The aggregate deal volume involving financial investors reached USD2.1 billion, marking a significant increase from USD1.3 billion in 2023 and reflecting a 65% year-over-year growth in deal volume.

The participation of these investors has introduced a new level of sophistication to the structuring and negotiation of M&A transactions. Financial investors typically emphasise the creation of long-term value, frequently introducing advanced practices in areas like corporate governance, risk management and sustainability. Their approach not only enhances the performance and competitiveness of the companies they acquire but also raises overall standards within the Turkish market. This shift is helping to modernise the business environment and foster a culture of continuous improvement across various sectors.

Warranty and indemnity insurance

Another trend that has emerged in the Turkish M&A market is the increasing use of warranty and indemnity (W&I) insurance, which generally provides coverage for breaches of warranties or indemnities given by the seller in an M&A transaction. W&I insurance can help mitigate the risks and liabilities associated with M&A deals, especially in cross-border transactions where the parties may have different legal systems, cultures and expectations. The demand for W&I insurance has grown significantly in Turkey, as more buyers and sellers seek to protect their interests and enhance their competitiveness in the market. As the transaction market continues to evolve in Turkey, in 2025, it is expected that awareness of W&I insurance will grow among prospective buyers and sellers, leading to its more frequent incorporation into the structuring of transactions.

Looking Ahead

The outlook for 2025/26 remains cautiously optimistic, even as the market navigates ongoing challenges such as geopolitical tensions and inflation. Despite these uncertainties, there is a noticeable increase in appetite for M&A transactions, and the market still offers significant opportunities for foreign investors, given its demographics and geography as well as technology developments. Market participants anticipate heightened activity from private equity funds, which are considered well-capitalised and actively seeking attractive opportunities within Turkey. Additionally, the current economic climate has prompted many small to medium-sized enterprises to seek investment and restructuring solutions on the corporate finance spectrum. This trend not only broadens the range of opportunities available but also underscores the importance of strategic investment in fostering stability and growth across the Turkish corporate landscape.