In merger and acquisition transactions in the Turkish market, a successful closing depends on thorough legal due diligence. Parties frequently focus on the financial statements and treat legal risk as secondary. But the details that fall outside a standard checklist are precisely the ones that produce unexpected cost for the acquirer after completion.
We set out below the ten legal risks most often missed at the M&A table under Turkish law, together with the strategies that address them.
1. Data Protection Non-Compliance
The fact that a target has published a privacy notice does not mean it is compliant.
The hidden risk: The target's data controllers' registry entry may not reflect its current corporate structure, or its consent texts may not meet the requirement of freely given consent. In e-commerce, SaaS and cloud-based businesses in particular, transfers of data abroad that do not comply with Article 9 create a concrete penalty exposure. For 2026, the administrative fine band for breach of data security obligations runs from TRY 256,357 to TRY 17,092,242, and for breach of the duty to inform from TRY 85,437 to TRY 1,709,200. These fines are not indexed to turnover; they are set in fixed statutory bands, updated annually by the revaluation rate.What to do: Review the actual data flow map, not merely the published texts, and obtain specific data protection indemnities from the sellers in the share purchase agreement.2. The Real Scale of Employee Claims
Social security filings may look impeccable while practice on the ground differs.
The hidden risk: Commissions paid in cash to sales staff, salaries partly declared at the minimum wage for tax reasons, and large accrued but untaken annual leave balances. These undocumented entitlements return as litigation costs for the new management once terminations begin after completion.What to do: Cross-check payroll against bank payments and actual bonus tables, and deduct the potential severance exposure for key personnel from the purchase price.3. Competition Law History and Undertakings
The hidden risk: The target may have been fined by the Competition Board in the past, or given undertakings in a settlement. Where new management is unaware of those undertakings and breaches them, the exposure is a fine of up to 10% of turnover. Restrictions on passive sales in distribution agreements also attract scrutiny.What to do: Search the Board's decisions and review non-compete obligations in distribution agreements in detail.4. Intellectual Property Gaps: Who Actually Owns the Code?
Where a technology venture has value, that value is its intellectual property.
The hidden risk: Code written by a former freelance developer still belongs to that developer unless assigned to the company in writing. (For employees on the payroll, Article 18/2 of the Intellectual and Artistic Works Act gives the employer the right to exercise the economic rights unless agreed otherwise; that presumption does not apply to independent contractors, a distinction to be verified case by case in diligence.) On the trademark side, the common defect is that the registration does not cover the Nice classes in which the company actually operates or plans to operate, leaving potential markets exposed. (Trademarks are registered by reference to the Nice classification; NACE is an economic activity classification and does not determine the scope of trademark protection.)What to do: Verify the IP assignment provisions in the employment contracts of founders and key developers individually.5. Change of Control Clauses
The hidden risk: A company may be valuable but owe its revenue to one large customer or to a single licence. If those critical supplier or customer contracts contain a clause allowing unilateral termination without compensation on a change of shareholding, the revenue stream that creates the company's value can disappear with the transaction itself.What to do: Screen critical supplier and customer contracts for change of control provisions and, where necessary, make the counterparty's written consent a condition precedent to closing.6. Real Estate and Lease Traps
The hidden risk: A lease of the factory from which the company operates may contain provisions giving the landlord a right to terminate on a change in shareholding, a route around the ordinary rules on corporate transfers. Defects in the building occupancy permit also invite municipal enforcement.What to do: Examine sub-letting and assignment provisions in leases, and compliance with organised industrial zone legislation, closely.7. Environmental, Social and Occupational Safety Obligations
The hidden risk: In industrial acquisitions in particular, historic waste management failures or gaps in occupational health and safety training go beyond administrative fines and can lead to criminal liability for managers or closure of the site. The scope and currency of environmental impact decisions should also be verified.What to do: Review environmental permits and licences and wastewater analysis reports with environmental engineers, not lawyers alone.8. Related Party Transactions
The hidden risk: Most common in family businesses. The company's main premises may be registered in the name of a manager's relative and leased at well above market rates. This engages two separate bodies of law that should not be conflated: Article 395 of the Commercial Code prohibits a board member from transacting with the company or borrowing from it; Article 13 of the Corporate Tax Law treats pricing with related parties contrary to the arm's length principle as a disguised distribution of profit through transfer pricing, giving rise to assessment. For the acquirer, the risk arises on both the corporate and the tax side.What to do: Table the related parties list and apply an arm's length test to eliminate artificial costs.9. Tax Risk
The hidden risk: Finance teams look at profitability; tax inspectors look for exposure. Ongoing tax disputes, missed instalments under restructuring arrangements and improperly claimed corporate tax reliefs require a tax law assessment beyond financial diligence. The five-year assessment limitation period leaves exposure open.What to do: In significant acquisitions, commission a separate tax due diligence report and hold back known tax exposures from escrow.10. Minimum Capital Compliance
The hidden risk: The minimum share capital is TRY 250,000 for joint stock companies and TRY 50,000 for limited companies; these figures were set by a 2023 Presidential Decree and took effect on 1 January 2024. Under provisional Article 15, added to the Commercial Code by Law No. 7511, the compliance period for companies below these thresholds expires on 31 December 2026 (extendable by the Ministry of Trade up to twice, by one year each time). A target that has not made the increase is deemed dissolved by operation of law, meaning it enters termination and liquidation: a direct threat to the legal existence of the asset being acquired.What to do: Check the trade registry records for compliance and make any capital increase a condition precedent to closing.This article is intended as general information on merger and acquisition practice and does not constitute legal advice or a due diligence report.
Last updated: 10 August 2026.
