Annual Turkish M&A Review 2016
A turbulent year for deal-making in Turkey
Total M&A deal volume in 2016 shrunk to its lowest level since 2009 with around US$7.7 billion through 248 transactions. Although total deal number remained flat, total deal volume dropped significantly by 53% y-o-y. Investors and sellers were both extremely prudent and adopted a wait-and-see position. Deal volume of foreign investors was at one of its lowest levels historically and private equity activity was sluggish. While the deal volume was dominated by middle market transactions in the absence of mega deals, numerous venture capital investments kept the total deal number largely unchanged from recent years.
Following several years of sustained deal volume, the deal-making environment in Turkey had suffered in 2016 due to volatile markets triggered by domestic and external political events and diminishing growth. Total annual M&A volume was around US$7.7 billion, at its lowest level since 2009, through 248 deals. While the deal number remained flat in the abundance of small cap deals especially backed by venture capital investors, the deal volume slowed down significantly with a decline of 53% y-o-y.
Foreign investors continued to maintain a long-term view of the Turkish market; however their deal volume, one of the lowest volumes historically, could not avoid a sharp decrease of 67% y-o-y. Mega deals were extremely rare as opposed to previous years and made an all-time low contribution to the annual deal volume, leading to a notably lower deal size on average. On the other hand, venture capital firms and angel investors increased their activity significantly and shaped the financial investors’ market where private equity funds acted rather slowly. In the midst of geopolitical tension and upcoming referendum on presidency, the deal-making environment is likely to continue to be challenging. Yet, we believe that investors will re-establish their confidence relying on the strong growth story of the Turkish market in the medium to long term.