Turkey below 2005 in mergers, acquisitions

ISTANBUL - Hürriyet Daily News

This file photo show the İzmir Port piled with containers. There are many companies with growth potential in terms of turnover and profitability, says Başak Vardar of Deloitte Turkey.AA photo

Mergers and acquisitions in Turkey accounted for an average size of $12 billion annually in the last seven years, according to a local Deloitte executive, who has underlined this remains far below the level reached in 2005.

“In 2005 the volume of mergers and acquisitions were between $28 billion and $30 billion. The average figure for the last seven years was $12 billion, but it is still below the desired level,” Mehmet Sami, a partner at Deloitte Turkey who is responsible for the mergers and acquisitions services, said at a meeting in the western province of İzmir, according ta company press release.

“There will be very good opportunities to find partners and financial resources. Our companies should be ready for this with a disciplined work supported by a consultant,” he said.

Turkey finally received an investment grade this year from Fitch Ratings after a few decades of hiatus, which may put the country in the spotlight for more capital inflows and direct investments. Turkey also oushines many countries in Europe and elsewhere, with its relatively high growth rates and a large population, an indication of market potentials.

Noting that mergers and acquisitions gathered pace in the last six years, Sami said mergers have generally been between domestic and foreign firms. The total number of related transactions is between 200 and 220 annually, he said, adding there is a great deal of interest toward Turkey to this regard.

Corporate shortcomings

Corporate governance and a need for better operational management were the main obstacles behind more mergers, Meditera Capital Managing Partner Ahmet Faralyalı said at the same event.

“Considering the current environment, Turkey has in fact still not achieved what is expected from it. The country has a great potential going forward. Mergers and acquisitions are increasing but we have no large markets in Turkey yet,” he said.

The foremost problem with the firms, which are suitable for mergers and acquisitions, is the lack of corporate governance and operational development needs, according to him.