Buying a Business in Turkey: Due Diligence for Foreign Investors

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1. What Should Be Checked Before Buying a Business?

Start with the identity of the seller, the ownership of the business and the scope of the proposed acquisition. A restaurant's trading name, a company's registered name and the person receiving the purchase price may be different. The agreement must explain the connection instead of leaving the investor to assume that everything is included.

The review should then examine liabilities, essential contracts, employees, premises and operating permissions. These are not merely documents to collect. They determine whether the business being offered can continue on the terms used to justify its price.

Before paying an exclusivity fee or signing a letter of intent, identify which provisions are binding. Confidentiality, deposits, exclusivity and costs can create obligations even while the final acquisition remains subject to negotiation. A short preliminary document deserves review when it commits money or limits the buyer's options.

2. Is It a Share Purchase or an Asset Purchase?

In a share purchase, the investor acquires an interest in the company. Its contracts and debts normally remain with that same legal entity, although a change-of-control clause or regulatory rule may require action. The buyer therefore needs to understand the company's history, not just the assets visible on the completion date.

An asset purchase can define particular equipment, stock, intellectual property or other rights to be transferred. However, calling the deal an asset sale does not automatically exclude business-transfer liabilities. Article 202 of the Turkish Code of Obligations addresses the acquisition of a business with its assets and liabilities; the actual transaction must be assessed against that framework.

The commercial objective should guide the structure. Buying a cafe's furniture is not the same as acquiring its lease, staff, brand and ongoing customer arrangements. The purchase schedule should distinguish what transfers, what is excluded and what depends on another party's consent.

3. Do the Ownership and Corporate Records Support the Sale?

Check the company type, current shareholders, constitutional documents, authorised signatories and relevant decisions. Restrictions on share transfers, pre-emption rights or pledged shares may affect the seller's ability to deliver the promised interest. A seller's business card or signature on an offer is not evidence of all necessary corporate authority.

For limited companies, Article 595 of the Turkish Commercial Code provides written and notarised-signature requirements for share transfers and, unless the articles provide otherwise, general-assembly approval. Joint-stock company transfers need their own analysis; the same checklist should not be applied mechanically to both forms.

A current document point: the Ministry of Trade states that companies incorporated from 1 January 2026 keep their share ledger and general-assembly meeting book through ETDS. For an acquisition involving such a company, relevant electronic records belong in the review. A paper-only request may miss the appropriate record, while an electronic entry still does not replace the legal transfer requirements.

4. Which Hidden Liabilities Matter Most?

Review tax and social-security exposure, borrowing, guarantees, overdue suppliers, litigation and obligations to related parties. A company may appear profitable while supporting another group company's debt or facing claims that have not yet become payable. Management accounts should be tested against the supporting records by the appropriate financial adviser.

The legal review should connect each identified exposure to the proposed agreement. A known dispute may justify a specific indemnity, a condition before closing or a price adjustment. A general statement that the seller will handle all old debts is weaker when it does not identify the claims, process and available security.

Contractual protection between buyer and seller does not necessarily prevent a creditor or public authority from pursuing rights granted by law. The buyer should understand both external liability and any right to recover from the seller. Tax and accounting specialists should assess the figures and transaction-specific tax consequences.

5. Will the Premises, Contracts and Licences Remain Available?

Identify the agreements on which the business depends: the premises lease, franchise, supply arrangements, distribution rights, software and important customer contracts. Check whether transfer, change of control or replacement of a key person requires consent or gives a termination right. The seller's assurance that a relationship is friendly is not a substitute for the necessary approval.

Operating permissions require similar attention. A licence may relate to the legal operator, the premises or a regulated activity. Establish whether it continues, requires an amendment or must be obtained afresh. Sector approvals and any applicable merger-control requirement should be assessed before a binding completion timetable is accepted.

For a business whose value lies in a brand or online operation, verify ownership and control of trademarks, domains, software and platform accounts. A right to use a name is not necessarily ownership of that name. The acquisition should also address lawful handling of customer and employee information.

6. What Happens to Employees When a Business Is Sold?

A workplace transfer is not a clean reset of employment obligations. The Ministry of Labour's guidance explains that a transfer does not itself remove employees' existing rights. Whether the proposed deal constitutes a workplace transfer, and the resulting responsibility for obligations, must be assessed on its facts.

The buyer should understand accrued leave, unpaid remuneration, pending employment claims and arrangements with key staff. An agreement between the parties allocating these costs is not the same as an employee losing statutory rights. Cost calculations should be coordinated with employment-law and payroll review.

Plan operational handover as carefully as the signatures. Authorised bank access, insurance, stock, supplier contacts and the transition of management should be addressed without sharing personal passwords or relying on informal access left in the seller's name. Foreign ownership also does not itself authorise a foreign investor to work in Turkey.

7. How Should Payment and Closing Be Structured?

Signing and closing need not be the same event. Where approvals, releases or document corrections are outstanding, the agreement can make completion conditional on them. Each condition should have an owner, evidence of satisfaction and a clear consequence if it remains unmet.

The price mechanism should suit the business. Stock levels, debt, cash and working capital may change between negotiation and completion. The agreement should explain which figures determine the price, how disagreements are resolved and whether any amount is retained or secured for identified risks.

A closing checklist should link payment to the agreed transfers, corporate actions, consents and delivery of records. An indemnity is only useful if the buyer can enforce it against a viable party. For a minority investment, also review voting, information and exit rights; our guide to shareholder disputes in Turkey explains why those rights matter after the investment.

8. Legal Review of a Proposed Business Acquisition

Legal Istanbul can review the proposed structure, investigate the legal records and negotiate acquisition documents around the findings. The scope can cover a targeted red-flag review or a broader transaction review alongside the buyer's financial and tax advisers.

For an initial enquiry, explain the business activity, whether shares or assets are being offered, the proposed ownership percentage and the negotiation stage. Mention any deposit, exclusivity deadline or planned signing date. This allows the work to focus on the decisions that still need to be made, rather than treating every acquisition as the same exercise.

Legal references: Turkish Commercial Code: company and share-transfer rules; Turkish Code of Obligations: business and contract transfers; Ministry of Trade: ETDS requirements from January 2026; Ministry of Labour: workplace transfers and employee rights. This article provides general information. Advice depends on the applicable rules and your circumstances.