You can learn about business in Turkey by watching this full-length interview (below) with Turkish lawyer Başak Yıldız Orkun, and by scrolling down and reading the detailed guide that she has written with us.
The video guide below is a playlist – split into several parts. One part will play right after the other.
Almost all the advantages of buying a business (below) have, on their flipside, a corresponding disadvantage.
The most important question to bear in mind when buying an existing business is why the existing owner wants to sell it! It will often be because it is failing or unprofitable or underperforming or simply very hard work for very little return.
Of course, there are genuine opportunities: for example, when the existing owner wishes to retire or is suffering from ill health; but, in my experience, these tend to be the minority of cases.
So, once you’ve answered this question, the next is how you can improve the position and make the business a success.
Advantages to taking over an existing business in Turkey
- Somebody else has already done, or paid for, all the start-up work – setting up the company, finding and renting premises, employing staff etc.
- The market for your goods or services should have been established.
- The business should already have plans, accounting policies, and operational procedures in place.
- Buying a business can give you the benefit of immediate cashflow rather than forcing you to fund both yourself and the business for what can be a long time before it becomes recognised and profitable.
- The business should have a financial history.
- As an established local business, it might make it easier to obtain local finance. However, in practice, local banks and others are usually reluctant to lend to a business that is under new ownership.
- You should have an existing customer base.
- You should have an existing network of suppliers.
- You will probably have existing staff.
- You should have all the plant and equipment needed to do whatever you do.
Disadvantages to taking over an existing business in Turkey
- It is an existing business. It will have processes that you’re likely to want to change and it may have staff who may not meet your ongoing needs.
- The owner might decide to open a competing new business just around the corner. It is important that this is prohibited in your contract of purchase.
- Your staff may well be loyal to the old owner and leave shortly after he sells to you. In many businesses, particularly bars and restaurants, the staff are a key component and a major influence on why customers come to you.
- Turning around an under-performing business is often much more complicated and time-consuming than building a new one.
You will often be taking over not only the business but any debts or claims that might exist against it and you can never be absolutely certain that you have fully identified the risks involved. You can often guard against this risk. You must make enquiries (carry out due diligence) to try to establish what these debts and liabilities might be and the contract under which the old owner sells the business to you should contain a clause stating that he has fully disclosed these liabilities. However, none of this alters the fact that a person who has a claim against the business will, usually, still have a claim against it once you’ve taken it over.
The big ones that you need to think about are claims by ex-employees, by the tax office, by your landlord, by customers and by suppliers.
However, probably the most important disadvantage of taking over an existing business is that you’re likely to have to pay a substantial amount for it and this will need to be funded.
If you decide to take over the business, you can either take over the business only – its name and assets – or the company that owns the business and so the business as well. If you were taking over only the business you would usually set up a new company to do so. Your new company would then buy just some or all of the assets of the old business. This can be less risky than taking over the company that owns the business (because you will probably not automatically take over its debts), but is still not risk free.
Are you the right person for the job?
Do you have the skills and attitude required to run this particular type of business? Are you better suited to developing an existing business or to creating a new one?
Do you have sufficient funds to take over a business in Turkey?
You will need to make a detailed assessment, not only of the cost of acquiring the business but also the money needed to turn it around and then run it.
Unless you are very familiar with business life in Turkey, speak to a local accountant when you become seriously interested in buying a business here. They will usually have some form of spreadsheet giving you all the major financial headings that you will need to think about. Some of them may be different from those which you’re used to.
Finding a business for sale in Turkey
Here there is a bit of a conundrum. The best businesses do not have ‘for sale’ signs outside their premises and they are usually not advertised in the press or even through specialist business agents. They tend to be passed on by way of personal contacts and word of mouth.
There are several specialist business sales agents in Turkey and they are well worth consulting, not just because of the businesses advertised by their companies but also because of their network of connections and their knowledge of businesses in any sector that could well be for sale if an appropriate buyer came along.
Other useful sources of useful information about businesses that might be for sale are your own personal contacts in the area, your lawyers, and your accountants.