Turkey’s M&A Activity: More Value or Volume?

ISTANBUL - On average, there are only approximately 50 private equity companies in Turkey involved in transacting M&A deals, the average of which takes a year and a half to complete. This level of activity is relatively small and the deals too infrequent (by the way, the worldwide average time to complete a deal in 2012 was 52 days) for a growing economy such as Turkey’s, according to Carlyle Group Managing Director and Co-Manager of The Middle East and North Africa Fund, Can Deldag.

Deldag also commented that Turkish company owners, most of whom are families, generally are not eager to give up control of their beloved enterprises. While this is of course true, and while it serves to hamper Turkey’s M&A activity, we observe another trend which is worth mentioning: Deals involving small and medium-sized companies are taking a greater share of overall M&A activity in Turkey.

In 2012, Turkey’s top 10 deals, or 3% of the volume, represented 84% of the total value of all deals (note: value refers to US dollar value; volume refers to number of deals). In other words, a whopping 97% of the number deals represented not very much value, comparatively speaking. Since smaller deals tend to carry much less risk and tend to create more value than larger deals, we believe Turkey’s M&A activity – while arguably weak compared to other growing economies – benefits from its more-volume-than-value structure.