When you buy a company you buy its past as well as its assets: unpaid taxes, under-reported social security premiums, severance liabilities, transactions carrying audit risk. Due diligence is how these risks are turned into price and contract terms.
Share deal or asset deal?
| Share deal | Asset / business transfer | |
|---|---|---|
| What is acquired? | The whole company with all rights and debts | Selected assets and the business |
| Past tax and SGK risk | Stays in the company, passes to the buyer | In principle stays with the seller; joint liability may arise in a business transfer |
| Taxes | Seller's gain on shares (may be exempt for joint stock shares held 2 years) | VAT, stamp duty; title deed fee on real estate; tax on the seller's gain |
| Permits, licences, contracts | Stay in the company | May need to be re-obtained or transferred |
| Employees | Unchanged | Employment contracts pass to the acquirer in a workplace transfer (Labour Law art. 6) |
Our scope
| Area | What we look at |
|---|---|
| Financial | Quality of earnings and balance sheet, normalised profitability, working capital, net debt, related-party transactions, contingent liabilities |
| Tax | Returns for the last 5 years, VAT refunds, withholdings, transfer pricing, hidden profit distribution and thin capitalisation, audit and invitation history, usability of VAT carried forward and losses |
| Social security and labour | Premium debt, correctness of incentives, missing days and undeclared employment risk, severance and leave liability, pending cases |
| Corporate | Registry records, share ledger, general meeting resolutions, capital payments, signing authority |
Legal due diligence (contracts, litigation, IP, permits) is carried out with lawyers.
Acquirer's liability for public debts
- Limited company shares: transferor and transferee are jointly liable, in proportion to their shares, for public debts arising before the transfer.
- Legal representatives: managers may be held liable for tax and SGK debts that cannot be collected from the company.
- Workplace transfer: transferor and transferee are jointly and severally liable for SGK premium debts.
Therefore no tax debt and no SGK debt letters are obtained before closing, and indemnity and security provisions are added to the contract. Late payment interest
Transaction documents and approvals
- Letter of intent (LOI), non-disclosure agreement, share purchase agreement (SPA), closing checklist
- Seller warranties and indemnities; price adjustment (net debt, working capital), deferred or escrowed part of the price
- Competition Authority approval: if the parties' turnover exceeds the thresholds in the communiqué, the deal cannot close without approval
- Sector approvals (BDDK, EPDK, BTK); notifications for foreign buyers
Simplified merger
If the acquirer holds all shares of the target (or all voting rights belong to the same shareholders), no merger report or audit is required; at 90% or more, the general meeting resolution may also not be required under certain conditions. Restructuring
Timing and output
For a mid-sized company with a ready data room, financial and tax due diligence takes 2–4 weeks. Output: red-flag summary, list of findings affecting price, recommended contract provisions, and a 100-day post-closing compliance plan.
Sources
Turkish Commercial Code No. 6102; Competition Law No. 4054 and the merger and acquisition communiqué; Law No. 6183 art. 35 and repeated art. 35; Law No. 5510 art. 88; Labour Law No. 4857 art. 6; Corporate Tax Law No. 5520 art. 13; Income Tax Law No. 193 repeated art. 80.