Türkiye remains an active transaction market. KPMG reported 574 M&A transactions in 2025 and estimated total deal volume, including undisclosed transactions, at approximately USD 18.5 billion. For an international buyer, however, a Turkish acquisition still requires careful translation between statutory accounting, operational reality and transaction economics.

What financial due diligence should answer

An audit and an M&A financial due diligence review serve different purposes. An audit is designed around the financial statements and applicable reporting framework. A buyer-side due diligence exercise is transaction-focused: it seeks to understand sustainable earnings, the quality of cash conversion, liabilities that may affect equity value, and the financial assumptions embedded in the purchase price.

1. Start with normalized EBITDA — not reported EBITDA

In owner-managed and mid-market businesses, reported EBITDA can contain items that will not continue under a new owner. The buyer should build a bridge from reported EBITDA to a sustainable or normalized level of earnings.

Typical adjustments include non-recurring legal or restructuring costs, owner-specific expenses, unusual foreign-exchange gains or losses, related-party charges that are not at market terms, exceptional bonuses, non-operating income, under-accrued expenses, and revenue or margin items that are not repeatable.

The important point is not the label attached to an adjustment. It is the evidence. A credible normalization should be supported by invoices, payroll data, contracts, management explanations, historical trends and — where relevant — a clear assessment of the cost that a new owner will actually incur.

2. Test revenue quality and margin sustainability

Revenue growth can create a misleading picture if it depends on customer concentration, short-term price increases, related-party sales, unusual year-end invoicing, channel stuffing, foreign-exchange effects or low-quality receivables.

A buyer should normally analyze:

• Monthly revenue by customer, product and geography
• Top customer concentration and customer churn
• Gross margin by product or business line
• Revenue cut-off around period-end
• Credit notes and post-period returns
• Related-party and shareholder-linked sales
• Contracted versus non-contracted revenue
• Recurring versus project-based income
• Foreign currency exposure in revenue and cost base
• Receivable collectability after the reporting date

For Turkish targets, the relationship between statutory invoices, e-invoice records, the general ledger, VAT reporting and management reporting is particularly useful. A revenue number that appears convincing in a management presentation should reconcile back to the books and to the underlying commercial evidence.

3. Establish normalized working capital before agreeing the price

Many private M&A transactions are priced on a cash-free, debt-free basis with a normalized level of working capital delivered at closing. If the target closes below that normal level, the buyer may have to inject cash immediately after completion.

Working capital analysis should therefore look beyond the closing balance. The buyer should examine seasonality, ageing, historical monthly trends, overdue receivables, slow-moving stock, supplier arrears, customer advances, prepayments and items that may have been deliberately accelerated or delayed before closing.

A working capital peg should be defined consistently with the accounting policies and classifications used for closing. Otherwise, a commercial agreement over price can turn into a post-closing accounting dispute.

4. Build the net debt and debt-like schedule from the ledger up

Bank borrowings are only the obvious part of net debt. Transaction pricing frequently requires a broader assessment of liabilities that are financing in nature, relate to a pre-closing period, or would otherwise require the buyer to fund an obligation that economically belongs to the seller.

There is no universal list of debt-like items. The correct treatment depends on the SPA definition, the target’s operating model, the historical accounting treatment and the economics of the liability.

5. Read the Turkish trial balance like a buyer

A Turkish statutory chart of accounts can reveal transaction issues that are easy to miss in a high-level management pack. The following accounts often deserve direct attention during acquisition diligence.

These balances should not be reviewed in isolation. A buyer should reconcile them to tax filings, e-ledgers, bank movements, ageing reports, payroll data and supporting schedules.

6. Tax due diligence: focus on exposures that can survive closing

Tax due diligence should identify material historical exposures, available tax attributes and items that may need specific contractual protection. In a share acquisition, the legal entity continues after closing, so historic tax exposures remain inside the acquired company unless economically allocated elsewhere through the transaction documents.

Typical areas include:

• Corporate income tax returns and tax provisions
• Domestic minimum corporate tax implications where relevant
• VAT returns, carried-forward VAT and deduction support
• Withholding tax filings and payment status
• Payroll withholding and social security compliance
• Transfer pricing and related-party transactions
• Thin-capitalization / financing considerations where relevant
• Tax losses and ability to utilize them
• Tax inspections, assessments, litigation and settlements
• Incentives, exemptions and investment certificates
• Stamp tax and transaction-document exposure
• Fixed asset tax basis and depreciation

The Turkish Revenue Administration’s 2026 corporate tax guide confirms that the standard corporate tax rate applicable to most corporate taxpayers for the 2025 and 2026 accounting periods is 25%, with different rates applying to specified sectors and activities. A transaction model should therefore use the rate applicable to the target’s actual status rather than assuming one generic tax rate.

7. Share deal or asset deal?

A share deal generally means acquiring the shares of the existing legal entity together with its assets, contracts, employees, liabilities and historical tax profile. An asset deal allows selected assets and liabilities to be transferred, but the Turkish tax, VAT, stamp tax, employee, licensing and contractual consequences may differ depending on what is transferred and how the transaction is implemented.

Turkey also has statutory merger and restructuring provisions under the Corporate Tax Law. Transactions meeting the relevant conditions can receive specific tax treatment; these rules should not be confused with an ordinary commercial share purchase.

8. Check Turkish Competition Authority filing requirements early

Competition clearance is a separate workstream from financial and tax diligence, but it can affect deal timing and signing/closing mechanics. The Turkish Competition Authority updated the merger-control thresholds in February 2026.

The Authority announced that the individual Turkish turnover threshold increased from TRY 250 million to TRY 1 billion, the aggregate Turkish turnover threshold from TRY 750 million to TRY 3 billion, and the worldwide turnover threshold from TRY 3 billion to TRY 9 billion. Whether a transaction is notifiable depends on the detailed rules, turnover calculations and the nature of the parties and transaction.

For a live transaction, competition counsel should confirm filing requirements using the current Communiqué and guidance rather than relying only on headline thresholds.

9. Turn diligence findings into deal protection

Due diligence creates value only when findings are translated into the transaction. A material issue may affect price, net debt, the working-capital mechanism, completion accounts, a specific indemnity, tax covenant, escrow, condition precedent or post-closing remediation plan.

10. Buyer-side financial & tax due diligence checklist

A practical first information request should normally cover at least the following:

• Three years of statutory financial statements
• Current-year monthly trial balances
• Management P&L by month and business line
• General ledger exports
• Customer and supplier ageing
• Inventory ageing and slow-moving stock
• Bank debt and facility agreements
• Shareholder / related-party balances
• Fixed asset register
• Capex history and committed capex
• Monthly headcount and payroll data
• Employee bonus and leave accruals
• Corporate tax returns
• VAT and withholding returns
• SGK declarations and payment status
• Tax audit / inspection correspondence
• Transfer-pricing documentation
• Related-party agreements
• Investment incentive certificates
• Material customer and supplier contracts
• Budget and forecast model
• Cash-flow forecasts
• Reconciliation between statutory and management reporting
• Post-balance-sheet collections and payments

11. Red flags we would investigate before signing

12. Do not stop diligence at closing

A buyer can complete a transaction successfully and still lose control of the Turkish finance function in the first 100 days. The opening balance sheet, bank mandates, ERP access, tax filings, e-ledger processes, payroll controls, intercompany balances and group reporting calendar should be part of the integration plan before closing.

For an international group, the key question is whether the Turkish statutory layer can produce reliable, timely and explainable data for headquarters. Post-acquisition integration should therefore connect local bookkeeping and tax compliance with group reporting rather than treating them as separate workstreams.

Frequently asked questions

Sources & regulatory references

1. KPMG Türkiye, KPMG Perspektifinden Birleşme ve Satın Alma Trendleri 2025.
2. Turkish Competition Authority, Mergers and Acquisitions Legislation Updated — 11 February 2026.
3. Turkish Revenue Administration, 2026 Corporate Tax Return Guide.
4. Deloitte Türkiye, Transaction Execution Services — Financial and Tax Due Diligence.
5. EY Türkiye, M&A Due Diligence.