Comprehensive Merger and Acquisition Services in Turkey | Expert M&A Solutions
Mergers and acquisitions (M&A) are critical business strategies used by companies aiming to consolidate or expand their operations through various transaction types and integration forms. While often used interchangeably, “mergers” and “acquisitions” hold different legal implications. A merger typically involves two companies of approximately the same size combining to form a new entity. Conversely, an acquisition occurs when a larger company takes over a smaller one, absorbing its operations. Both processes can be conducted in a friendly manner or take the form of a hostile takeover, depending on the target company’s board’s approval. We are a leading mergers and acquisitions company in Turkey, providing complete support to businesses through the M&A processes.
Types of Mergers and Acquisitions Transactions
Horizontal Mergers: These occur between companies in similar industries, which may or may not be direct competitors. Such mergers aim to consolidate market power by combining business resources.
Vertical Mergers: This type involves a company merging with a supplier or customer within its supply chain to secure its operations and reduce supply chain costs.
Conglomerate Transactions: These are primarily for diversification, involving companies from unrelated industries, aiming to broaden the business base and minimize risks associated with industry-specific downturns.
Forms of M&A Integration
Statutory Mergers: In these cases, a larger acquirer merges with a smaller target, which ceases to exist as an independent entity post-transaction.
Subsidiary Mergers: The target company becomes a subsidiary of the acquiring entity but continues its operations as a distinct business unit.
Consolidation: Both companies involved dissolve and merge to form a new corporate entity.
Forms of Acquisition
Stock Purchase: The acquirer buys the target’s stock in exchange for cash and/or shares, requiring approval from the majority of the target’s shareholders. This process includes all assets and liabilities, with tax liabilities falling on the shareholders.
Asset Purchase: The buyer acquires only the assets of the target company, selectively avoiding liabilities unless explicitly included in the deal. This method often does not require shareholder approval unless the assets represent a significant portion of the company’s value.
M&A Payment Methods
Stock: Payment is made through shares based on a predetermined exchange ratio.
Cash: A straightforward payment method where the acquirer pays cash for the target’s shares.
Valuation in Mergers and Acquisitions
Valuation is a pivotal aspect of M&A, involving both the acquirer and the target. It is crucial for setting the transaction price based on various valuation methods:
Discounted Cash Flow (DCF): This method forecasts the target’s future cash flows to estimate its value.
Comparable Company Analysis: This involves using valuation multiples of similar public companies to estimate the target’s value.
Comparable Transaction Analysis: Past M&A transactions within the same industry are analyzed for benchmarks and valuation insights.
Mergers and acquisitions play a significant role in shaping industries by allowing companies to grow, diversify, or gain strategic advantages.
Merger and Acquisition (M&A) services and corporate restructuring in Turkey play a vital role in the financial world. Every day, investment bankers and specialized firms globally facilitate M&A transactions, merging companies to form larger entities. Alternatively, corporate finance can also involve breaking up companies through methods such as spin-offs, carve-outs, or tracking stocks.
These deals can be substantial, sometimes valued in the hundreds of millions or even billions of dollars, and they significantly influence the future of the companies involved for many years. For a CEO, successfully leading an M&A deal can be a career-defining moment.
At our firm, our presence across 24 countries and our extensive network provide a distinct advantage in the market. Our connections with law firms, accounting firms, and chambers of commerce in these regions offer the local insights necessary to manage M&A operations effectively. Our experience and the resources we’ve built place us in a leading position to initiate, follow through, and execute M&A deals with success.
M&A Opportunities and Challenges
M&A deals can generate substantial profits and unlock vast financial resources for companies. For businesses facing bankruptcy or financial challenges, merging with another company may be the only way to survive, while also creating opportunities to access much-needed cash and credit.
Acquiring businesses can be attractive, whether to build a conglomerate or for a quick resale to gain profits. In such deals, the organization closely scrutinizes the business relationships between the parties involved. Proper documentation, along with clear reasons for the merger or acquisition, is essential. Stakeholders’ concerns must be addressed since, once the deal is finalized, the acquiring company assumes all debts and responsibilities. Employees from the merged company must be fairly compensated, offered new positions within the combined company, retrained, or referred elsewhere.
However, M&A operations also face challenges. In some countries, regulations limit the acquisition of land, property, or businesses, making certain transactions difficult. Additionally, the frequency of hostile takeovers and mergers has increased. M&A trends are also cyclical, and when lending institutions tighten credit availability, the pace of mergers can slow significantly.
Navigating the M&A process in Turkey can be complex, but it generally follows a well-defined series of steps. Here is an outline of the typical process:
Compile a Target List: The first step is creating a list of potential buyers or sellers to initiate the transaction.
Contact the Targets: Engaging with the target companies to gauge interest and explore the feasibility of the deal is crucial. Knowing how to present an offer effectively is key, as the role of the buyer is often more challenging than that of the seller.
Send/Receive a Teaser: A teaser, or executive summary, is sent to the buyer, providing just enough information to spark their interest, such as the company’s products, customers, key challenges, and high-level financials. The teaser is typically anonymous, so the buyer doesn’t know the exact company until further in the process.
Sign a Confidentiality Agreement: Both parties sign an agreement to maintain confidentiality regarding any discussions and materials exchanged during the process.
Send/Review a Confidential Information Memorandum (CIM): This comprehensive document contains detailed information about the seller, such as the company’s history, product descriptions, and financials, helping the buyer determine whether to proceed with the transaction.
Submit/Solicit an Indication of Interest (IOI): The buyer expresses formal interest in a deal through an initial offer, typically within a valuation range rather than a fixed price.
Conduct Management Meetings: Both parties meet to discuss the business in more detail and assess the potential for a future partnership. These meetings help determine compatibility between the two companies.
Submit/Request a Letter of Intent (LOI): Based on the information gathered, the buyer submits a detailed offer, including a firm price for the deal.
Perform Due Diligence: In this phase, the buyer thoroughly examines the seller’s financial records and operational details to ensure all claims are accurate.
Draft a Purchase Agreement: Once both parties agree on terms, the deal is formalized through a legally binding purchase agreement.
Close the Deal: Both parties sign the required paperwork, and the buyer transfers payment in exchange for ownership of the company.
Handle Post-Closing Adjustments and Integration: After closing, there may still be financial adjustments to handle, and the buyer typically begins integrating the acquired company into their operations or maintaining it as an independent entity.
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