Financial Due Diligence and Modelling Services

As the deal-making environment becomes ever-more complex, you need an advisor you can trust who has an in-depth understanding of delivering successful deals.

If you’re a business or private equity firm, we will help to develop your M&A strategy and manage the deal to successful completion, whether you’re buying or selling. We work with you to answer the key questions: Which business exit strategy is best for me? How can I prepare my company for exit? Who are the ideal buyers in my target market? How do I maximise value?

Our experts have an intimate knowledge of the challenges facing organisations across a broad range of markets and industries. We work in close collaboration with you to deliver shareholder objectives and real value from the transaction. As part of a large global network, we give you access to the right decision makers at the right time.

Mergers and acquisitions are one of the most important investment methods used by both domestic and foreign firms and private equity funds due to their operational and financial efficiency. At KPMG Türkiye, we offer a wide range of support for both the buy and sell side for the issues you need in the financial context from the beginning to the end of this process.

Financial Due Diligence Services 

This is a detailed review analysis identifying the financial and operational performance of the target business, risks and potential findings that could hinder the agreement, during the process of buying/selling the firm. At KPMG Türkiye, our expert team of consultants in the industry will assist you in this process, which mainly includes the review of the following elements.

• Principles of preparation of financial statements and reconciliation of financial statements prepared under different principles (statutory, management, IFRS accounts, etc.).
• The main factors affecting sales, cost accounts and operating costs, and their impact on gross profit, EBITDA and changes in net profit margin.
• Core profitability analysis, which shows the sustainable profitability of the target firm, for the purpose of consideration at the valuation stage.
• Principal working capital analysis, which analyzes the firm's net working capital requirements, cash conversion period and seasonality.
• Principal debt analysis, which shows on-balance sheet and off-balance sheet debt and debt-like balances that are expected to be considered in the valuation phase.
• Analysis of capital expenditures by their content (for growth or maintenance and repair).
• Related-firm transactions and their potential impact on underlying profitability following a potential sale.

Other financial advisory services for buyer/seller parties

In addition to providing financial due diligence services in merger and sale transactions, we also assist the buyer/seller party in the following areas:

• Pre-transaction review: Supporting the investment decision through an initial review prior to accessing the target firm's financial information.
• Sales process support and data set preparation: Data set preparation for selling firms that are the subject of the merger or transfer to support effective execution of the data acquisition process.
• Data room preparation: Review, track and upload procured data into the data room and follow up on buy-side requests.
• Support for business unit sales (carve-out): An analysis of the principles for preparing the annual report of this business unit in cases where it is planned to invest in some of the target firm's business units
• Financial Modeling (Development/Valuation): Creation or review of the business plan that will be the subject of the firm valuation.
• Sales/Purchase Price Adjustments: Determination of price adjustments affecting the sale price of the target firm, according to the criteria of the purchase contract.
• Assistance with sale and purchase contracts: Support in the preparation of collateral, guarantees and price adjustment mechanisms.
• Closing / Price Adjustments: Preparation and analysis of closing transactions in accordance with the pricing mechanism established in accordance with the share purchase contract.

Business Due Diligence Services

Business Due Diligence focuses on analyzing the external factors that affect the current and future performance of the target firm that will be the subject of an investment decision. Commercial due diligence comes into question for the buyer or seller party involved in the transaction in question. In studies conducted for both parties, potential investors should expect a comprehensive and critical perspective. The scope of the study depends on the extent of the data that the target firm can share and the stage of the investment decision. Basically, commercial due diligence provides answers to important questions about the market in which the target firm operates, other markets that affect this market, the firm's positioning in the market, its business plan and value creation. Some sample questions answered;

• What is the investment thesis?
• What are the key issues affecting the development of the market?
• How can the target firm win in this market?
• Is the business plan realistic?
• What are the key risks of going through with the agreement and how can I mitigate them?
• What are the value creation opportunities / synergies?

ESG Due Diligence

With our KPMG Sustainability team, we help you to conduct ESG due diligence, which is as important as financial due diligence, in the most accurate way.

• Buy-side - environmental, social and governance due diligence.
• Sell-side - environmental, social and governance due diligence.

Legal Due Diligence Services

With our team of experts in mergers and acquisitions, we provide legal support to foreign and domestic capital companies at every stage from the offer stage to the closing of the transaction. We work together with finance, tax and other relevant specialized departments in mergers and acquisitions, and we carry out the process effectively in every aspect and take a holistic approach. In this way, we ensure that a flawless and trouble-free result is achieved and the project is successfully completed.

Our M&A services mainly consist of the following:

Legal due diligence: Legal due diligence of the target firm. As part of legal due diligence, the target firm's corporate documents, contracts, intellectual property rights, financing arrangements, permits and licenses, assets, labor law compliance, and existing litigation and enforcement proceedings may be determined as the primary subjects of review. As a result of legal due diligence, we identify the target firm's legal risks and situations that may adversely affect its financial condition or operations from a legal perspective and determine the requirements for the transaction. Thus, we conduct a comprehensive legal due diligence of the target firm during the acquisition process.

• Legal due diligence of alternative acquisition structures (merger, demerger, asset sale, stock transfer),
• Preparation of confidentiality contracts, pre-conditions, term sheets, letters of intent including legal and commercial terms in accordance with Turkish law,
• Preparation and negotiation of share transfer contracts (including terms, conditions, representations and warranties, indemnification provisions and guarantee mechanisms determined as a result of due diligence),
• Preparing and negotiating shareholders' contracts,
• Obtaining pre-transaction approvals, if required (Competition Authority approval, BRSA approval, EMRA approval, etc.),
• Conducting closing procedures for share transfers.

Legal Due Diligence Services

With our team of experts in mergers and acquisitions, we provide legal support to foreign and domestic capital companies at every stage from the offer stage to the closing of the transaction. We work together with finance, tax and other relevant specialized departments in mergers and acquisitions, and we carry out the process effectively in every aspect and take a holistic approach. In this way, we ensure that a flawless and trouble-free result is achieved and the project is successfully completed.

Our M&A services mainly consist of the following:

Legal due diligence: Legal due diligence of the target firm. As part of legal due diligence, the target firm's corporate documents, contracts, intellectual property rights, financing arrangements, permits and licenses, assets, labor law compliance, and existing litigation and enforcement proceedings may be determined as the primary subjects of review. As a result of legal due diligence, we identify the target firm's legal risks and situations that may adversely affect its financial condition or operations from a legal perspective and determine the requirements for the transaction. Thus, we conduct a comprehensive legal due diligence of the target firm during the acquisition process.

• Legal due diligence of alternative acquisition structures (merger, demerger, asset sale, stock transfer),
• Preparation of confidentiality contracts, pre-conditions, term sheets, letters of intent including legal and commercial terms in accordance with Turkish law,
• Preparation and negotiation of share transfer contracts (including terms, conditions, representations and warranties, indemnification provisions and guarantee mechanisms determined as a result of due diligence),
• Preparing and negotiating shareholders' contracts,
• Obtaining pre-transaction approvals, if required (Competition Authority approval, BRSA approval, EMRA approval, etc.),
• Conducting closing procedures for share transfers.

Information Technologies Due Diligence Services

Information is the only corporate asset whose value increases with its use. The IT Situation Assessment service goes beyond the presentation of technological facts and includes a detailed analysis and reporting of the target firm's IT capabilities in terms of risks, opportunities and value creation.

• Value Creation: Assessment of the target firm's IT systems and strategies in terms of performance and effectiveness through benchmarking against best practices and similar companies. Development areas are identified, investment and resource. requirements are determined in line with the buyer's expectations.
• Risk: IT risk management aims to protect value. Risk analysis aims to identify IT risks that could significantly impact the value of the target firm. Accordingly, IT strategy and business objectives are analyzed by assessing key issues such as the e-commerce environment, applications, third-party access, privacy/integrity, and accessibility.
  
• Opportunities: Opportunities are assessed that may arise from changes in the target firm's IT capabilities in terms of operational efficiency and performance improvement. This assessment identifies opportunities for significant improvements in the target organization's IT capabilities for customers and users through changes in the target firm's IT capabilities. These identified opportunities are used to demonstrate the value that can be realized for the buyer firm.

Tax Due Diligence Services

Our tax team, specializing in mergers and acquisitions, provides tax due diligence services at every stage of the project. At the same time, we are committed to adding value to your firm throughout the project, through an effective working process with you and your other advisors. Some of our corporate merger and acquisition services include the following.

• Pre-acquisition tax planning
• Analysis of the tax implications of alternative acquisition structures (merger, asset or share purchase, etc.)
• Tax risk assessment ("tax due diligence")
• Identification of tax opportunities during the project evaluation process
• Assistance in the implementation of the planned tax structure after the acquisition
• The most effective use of inherited tax benefits (tax losses, etc.)
• Assistance in discussing tax issues with other parties (seller vs. buyer)
• Proposing tax efficient solutions to international problems (cash transfer, reflection of purchase/sale costs, etc.)