Bright spot

Deal activity is at a record level and heading upwards in Turkey


In some countries a grand total of just over 300 M&A deals for the year may seem pretty low, even in the present economy. But in fast-growing and still-emerging Turkey, the volume of M&A activity last year was the highest for at least six years and, although data is unavailable, probably ever.

According to Thomson Reuters, last year saw 314 M&A transactions announced involving Turkey worth a combined $18.8bn (£11.9bn). Other data providers have slightly varying figures, but all agree that 2012 was a good year when it came to interest in Turkey.

From the perspective of the legal advisers on those deals, at the top end big international firms jostle for position with the locals. Turkish firms such as Hergüner Bilgen & Özeke, Pekin & Bayar, Pekin & Pekin or Taboglu & Dermihan have won work alongside Freshfields Bruckhaus Deringer, Hogan Lovells, Link­laters and White & Case.

A handful of regional Eastern European firms, including Linklaters spin-off Kinstellar, are also doing well when it comes to picking up instructions on Turkish deals.

Buoyant zone

The mood in domestic firms, both those that are wholly independent and those with formal associations with international players, is accordingly buoyant.

“The year was quite good, not only in my firm but to my knowledge in most firms,” says Cüneyt Yüksel, co-managing partner of DLA Piper’s associated Turkish firm Yüksel Karkin Küçük.

“It was a much better year than 2011 in terms of the number of deals,” agrees Pekin & Pekin managing partner Fethi Pekin.

The biggest announced deal of 2012 emerged right at the end of the year, when a Turkish-Malaysian consortium won the bid to acquire 25-year concession rights for motorways and bridges from the Turkish government for $5.72bn.

The biggest completed deal, meanwhile, saw Russia’s Sberbank acquire a 99.85 per cent interest in Dexia’s Turkish subsidiary Denizbank for $3.86bn.

A host of firms picked up work on the transaction; White & Case acted for Denizbank while Link­laters, Taboglu & Dermihan, Austrian firm CHSH Cerha Hempel Spiegelfeld Hlawati and Kinstellar all had roles advising Sberbank.

There were, however, only three announced deals last year greater than $1bn and much of the Turkish market remains focused on more mid-market transactions.

Turkey also saw a decent flow of private equity deals, according to lawyers, with Turkish funds reasonably active and looking for opportunities. One example was Blackstone’s acquisition of a €200m real estate portfolio from Dutch company Redevco, which saw the private equity group acquire three shopping centres in its first property investment in Turkey. Pekin & Bayar picked up the local instruction from Redevco alongside Irwin Mitchell in the UK, while Salans and its Turkish ally Balcioglu Selçuk Akman Keki (Baseak) acted for Blackstone.

“Private equity funds have made good money out of Turkey so now they’ve got the courage to invest more,” Yüksel points out.

Paksoy head of corporate Elvan Aziz points out that Turkish private equity funds are usually based outside the country – although this does not limit their work in the country.

“There are local funds in Turkey run by Turkish directors and managers,” she notes. “Some recently raised a significant amount of funds. Due to legal and tax advantages of offshore jurisdictions, most are domiciled outside Turkey.”

Bank lending has also picked up in the past year, says Pekin & Bayar partner Selin Bayar, stimulated by the stability of the country’s banking system.

But not all areas of work have been busy recently.

Selin Bayer
Selin Bayer

“We’ve had a quiet capital markets for a couple of years,” Bayar adds. “This year it started to pick up with the privatisation of Halkbank. The government needed to privatise it to limit its budget deficit and they wanted to do it in 2012, which they achieved. That triggered a bit of action in the capital markets and we expect more in 2013.”

The Halkbank privatisation, which Pekin & Bayar advised on, was Turkey’s largest share sale, with $2.5bn raised from a 24 per cent sale in the bank. According to reports it was also the third-largest sale of shares across Europe in 2012.

International links

Although the crisis has not had too great an impact on Turkey’s legal market as the work has kept flowing, firms are finding themselves changing the way they work and adapting their business models.

Internationalisation is now a fact of the market and, while a number of Turkish firms are sticking determinedly to their independence, a growing number are signing agreements with Anglo-Saxon and other foreign players.

In October, Austrian firm Schoen­herr announced a merger with its Turkish co-operation partner CTK Türkoglu & Celepçi following two years of formal association. The merger took effect at the start of this month.

The most recent tie-up, in November, was between Allen & Overy and Hergüner spin-off Gedik & Eraksoy which, like several other association agreements, saw the establishment of a domestic firm for the purposes of the alliance.

Similarly, Salans’ January alliance with Baseak saw an established Turkish firm expand with the addition of partners from Salans’ existing Turkish ally. Managing partner Galip Selçuk says the first year of the venture has been successful.

“We already had a good local practice and having an association with Salans brought us good international capability with cross-border transactions,” he says.

Selçuk is now looking forward to Salans’ imminent three-way merger with SNR Denton and Canada’s Fraser Milner Casgrain.

“We expect that to be quite positive,” he says. “From a Turkish point of view we believe it’ll be good. The expectation for our clients here is an increase in capability we’ll have in these other jurisdictions.”

Fethi Pekin
Fethi Pekin

Other shifts in firms’ strategies are more subtle. Fethi Pekin says Pekin & Pekin is getting involved on some big deals from a new angle.

“We’re increasingly involved in representing Turkish clients, seeing ourselves on the sell-side where we never used to be,” he reports. “We’re also more often on the borrowing side in transactions. The Turks are getting more sophisticated, understanding the need for high-level professional legal advice and realising the benefits of it.”

Think small

At Paksoy, Aziz says the firm’s independence is not in question.

“We do think about our strategy ­every now and then, but so far we have a good position in the market and good relationships with the magic circle and silver circle firms that aren’t present in Turkey,” she says.

However, the firm made a deliberate move last year to target more small and mid-sized deals.

“Getting big-ticket deals isn’t an issue as we have a solid reputation and experience, and a good M&A client base,” Aziz explains, saying the strategic decision was not due to fewer big deals but rather a desire to serve a new client base.

“Sometimes the fees can be a bit high – they want the expertise, but they want to pay less because of the deal size – we came up with a formulation in response to that,” she says.

Aziz says Paksoy came up with a formula allowing them to field a mid-level team with a supervising partner for such deals, thus providing a more cost-efficient service. She believes the decision has helped the firm develop its M&A capabilities.

Code test

The other great change in the market, covered in depth in The Lawyer’s last Turkey report (17 September 2012) is the new commercial code. Enacted in July, this introduced provisions designed to bring Turkish laws into line with legislation across much of Europe.


The impact of the code is still limited, say lawyers, although the changing rules meant quite a lot of advisory work as provisions in documents changed. Clarity over the code’s changes is also improving.

“It was difficult for the first couple of months because it lacked secondary legislation in place,” says Selçuk.

Yüksel agrees, saying that the impact on “daily life” has so far been limited.

Bayar adds that the financial assistance rules brought in by the code made acquisition financing and restructuring “so much more difficult”.

She adds: “It’s had quite an effect – banks are looking at these things very carefully before they lend.”

Again, the lack of implementing legislation has been an issue but, longer term, Bayar is confident the code will allow a wider range of transactions that previously were not possible in Turkey.

“The code has had a positive impact, but it’s still at an early stage in terms of implementation and supporting legislation continues to come out,” adds Pekin. “The markets have taken it positively. It brings in transparency, it brings in corporate governance and it brings in a simpler way of doing business. It’s basically making investors’ lives easier.”

Aziz points out that case law is also yet to be established, but like Pekin she is positive about the code.


“Since July the authorities have made good progress in terms of clarification of some of the major corporate actions such as mergers or spin-offs because there were certain ambiguities in the legislation,” she says. “This law will take a few years to settle in.”

Turkey has also just introduced a new capital markets law. Like the commercial code, many provisions are modelled on EU law. While much of the media reporting on the law has focused on provisions that reportedly make commentary on capital markets a criminal offence, overall the legal market welcomes the change, hoping it will encourage activity in this sector.

So the outlook for 2013 is positive.

“I’m positive about this year, as is my firm,” says Aziz, while Pekin also thinks 2013 is likely to be better than 2012.

“I’m happy to see that other firms are doing well,” adds Yüksel. “I feel happy when I see progress generally in the Turkish legal market.”

He says the next stage is the continuing development of the standard of work in the market, in line with the rest of the world.

Sectors where activity is most confidently expected are infrastructure, healthcare, retail, energy and financial services – all of which will help keep Turkish firms busy and growing for the foreseeable future.

Why women flourish at Turkish corporate law firms


The Turkish legal market is, in many ways, still developing compared with other European jurisdictions but in one aspect this seems to be a bonus diversity.

Turkey’s corporate law firms have a high number of female partners. Several of the major independents have equal numbers of male and female equity and salaried partners, and it is rare for a firm to have no female partners. At associate level there is an even higher proportion of female lawyers.

One boutique firm, Aritman Yildirim Aksun (AYA) has no men at all, with its legal staff of three partners and one senior associate all female.

The high proportion of women in the legal profession, at least at corporate and commercial firms, is something many have noticed but few have analysed. There is a lack of concrete statistics on either the number of graduates or lawyers in Turkey.

The Turkish Bar Association’s statistics are three years out of date, and report that in December 2009 there were a total of 66,260 lawyers in Turkey of which 23,776, or 36 per cent, were female. In Istanbul, where most corporate firms are located, just under 40 per cent of the 24,989 lawyers were female.

Since then anecdotal evidence suggests that more and more young women have been joining the profession.

“The banking and financial system is dominated by male players,” says Pekin & Bayar partner Selin Bayar. “Therefore, more females choose to study law rather than take courses that would take them towards the financial system. It’s easier for women to find a top place in the legal market than in the financial sector.”

Paksoy corporate head Elvan Aziz agrees that becoming a lawyer is popular among young Turks, and several recently opened universities are offering credible legal courses.

Aziz also thinks corporate law could be more attractive to women than becoming an old-style advocate lawyer.

Certainly, the corporate firms report that applications from young women now outweigh those from young men. At Yüksel Karkin Küçük, co-managing partner Cüneyt Yüksel says around three-quarters of associates are women, as are three of the firm’s nine partners.

“We’d like to increase the number of male associates,” Yüksel admits, reporting that 70 per cent of applications for jobs come from women.

Paksoy’s Aziz says: “Sometimes, we try to pick up a male associate to keep a balance but it seems that females are more interested to work in law firms like ours.”

Turkey’s legal market is infamous for being one where spin-offs and boutiques are common, and Aziz says younger men are partly responsible.

“When they reach a certain level they prefer to open their own firm or take a position as an in-house lawyer,” she says. “Females are less inclined to do that. Becoming a partner takes a long time at a law firm and females have the commitment to stay and wait for that seniority.”

Cukur & Yilmaz competition partner Ozlem Kurt agrees with Aziz.

“Women are more hard-working and they will stick with you longer than men – they’re loyal,” she believes.

Pekin & Pekin managing partner Fethi Pekin thinks the CVs that come through from women are better than those from their male counterparts.

While there clearly is high quality coming in at the entry level, women also have good examples to follow. With so many female partners around it is perhaps more obvious to a young Turkish woman that she can become a partner and even lead a firm than in other jurisdictions.

Aziz argues that one thing that helps this is Turkey’s family culture. Although men are still expected to be the main bread-winner, help with bringing up children from the wider family remains common. She also points out that domestic labour is cheap, allowing professional women to hire cleaners, nannies and other staff so they can focus on their career.

Perhaps most importantly, nobody can point to a factor that discourages women from remaining at a firm, climbing the career ladder and becoming a partner.

Lawyers think the trend for women entering the profession will persist, which bodes well for the future.

Whatever Turkish firms are doing right on diversity – deliberately or otherwise – law firms in other jurisdictions could learn some useful lessons from them.

Key figures: Turkey

GDP (2011): $775bn

Inflation (Dec 2012): 6.2%

Population (Dec 2011): 74.7m

Life expectancy at birth: 74

Unemployment rate (Oct 2012): 9.1%

Source: World Bank, Turkish Statistical Institute