Business valuation is the determination of the economic value of a company or a shareholding at a specific date, for a specific purpose, under a specific definition of value. The difficult part is rarely the method. It is establishing at the outset which definition of value the transaction requires and to whom the report will have to be defended. A report prepared for a court is not the same instrument as an indicative figure prepared for a seller.
There is no single company value. For the same company on the same date, a shareholder exit calls for real value, a transfer to a related party calls for an arm’s length price, financial reporting calls for fair value, and a sale negotiation produces investment value that reflects one buyer’s synergies. Different figures are not an error; they are a difference of definition.
Mandatory standards apply only in defined areas. Valuations carried out under capital markets legislation must follow the International Valuation Standards. For a privately held company valued for a share transfer or a shareholder dispute, no standard is imposed by law, so the standard and the definition of value must be fixed in the engagement letter and stated in the report.
One point is specific to 2026. Inflation adjustment is not applied for the 2025, 2026 and 2027 accounting periods, so statutory book figures drift steadily away from real values. Valuations built on book value or on unadjusted profit will mislead during this period.
Which transactions require a valuation, and on what legal basis?
| Transaction | Value required | Basis and practical consequence |
|---|---|---|
| Withdrawal or expulsion of a shareholder in a limited liability company | Real value of the capital share | Turkish Commercial Code Article 641: the departing shareholder is entitled to exit compensation corresponding to the real value of the capital share. Real value is not defined by statute, so the method and the valuation date become the centre of the dispute. |
| Action for dissolution for just cause in a joint stock company | Real value of the shares | Article 531: instead of dissolving the company, the court may order that the claimant shareholder be removed against payment of the real value of the shares. |
| Merger, division, change of legal form | Real value and equalisation | Article 141: shareholders may be given a choice between shares in the acquiring company and exit compensation equal to real value. Where the exchange ratio is not properly set, an action for equalisation compensation follows. |
| Refusal to approve a share transfer | Real value | Article 493 for joint stock companies and Article 597 for limited liability companies: where the company refuses to approve the transfer, the offer to take over the shares at real value governs. |
| Contribution in kind | Value ascribed to the contributed asset | Article 343: contributions in kind are valued by experts appointed by the court. Where shares in another company are contributed, the valuation feeds directly into that process. |
| Significant transaction in a listed company | Exercise price of the exit right | Capital Markets Board Communiqué II-23.3: in companies whose shares are not traded on the exchange, a valuation report based on the value at the date the board resolution was disclosed is prepared to determine the price. |
| Share transfer between related parties | Arm’s length price | Corporate Tax Law Article 13: a price that departs from the arm’s length principle is treated as a disguised profit distribution through transfer pricing. The valuation is the evidence file for the price. |
| Transfer of an asset with no established price | Deemed value | Tax Procedure Law Article 267: deemed value is determined successively by average price, cost, and appraisal. |
| Accounting for a business combination | Fair value | IFRS 3 and IFRS 13: allocation of the consideration to identifiable assets and liabilities, measurement of goodwill, and subsequent impairment testing. |
| Inheritance, matrimonial property, enforcement | Real value of the shareholding | Courts generally appoint experts. A defensible report obtained in advance sets the frame within which the court expert works. |
Which definition of value applies to you?
Which valuation standard is mandatory in Turkey?
Companies subject to capital markets legislation, capital market institutions and issuers must apply the International Valuation Standards published by the appraisers’ association and the capital markets association in valuations carried out under that legislation. The requirement comes from the Capital Markets Board Communiqué III-62.1 on Valuation Standards in Capital Markets, published in the Official Gazette on 1 February 2017.
Outside that perimeter — a private share transfer, a shareholder exit, a management-purpose valuation — no statute imposes a particular standard. That does not mean no standard applies. It means the applicable standard and the definition of value must be stated expressly in the engagement letter and in the scope section of the report. When a report is challenged later, the first question asked is which definition of value it was prepared under.
Not to be confused with real estate appraisal. Under capital markets legislation, real estate is appraised by authorised appraisal companies on the regulator’s list. A business valuation is a separate exercise; where the balance sheet contains real estate, a separate appraisal may be required and it becomes an input to the business valuation rather than a substitute for it.
Why the balance sheet alone is not enough in 2026
Under Law No. 7571, published in the Official Gazette of 25 December 2025, financial statements are not subject to inflation adjustment for the 2025, 2026 and 2027 accounting periods, irrespective of whether the statutory conditions for adjustment are met. Banks, financial leasing, factoring and financing companies, payment and electronic money institutions, capital market institutions, insurance and pension companies are outside the suspension and continue to apply it.
The valuation consequence is direct: property, plant and equipment, inventories and equity items continue to be carried at historical cost, while revenue and expenses arise at current price levels. Depreciation falls below real replacement cost, reported profit looks higher than it is, and book value stays lower than it should be.
Book value based approaches
Net asset value taken from an unadjusted balance sheet sits materially below real value in asset-heavy companies. Real estate, machinery and inventory have to be restated to current values within the valuation itself.
Earnings and multiples
Multiples calculated on unadjusted profit ignore monetary gains and losses. The distortion is not one-directional: cash-rich and highly indebted companies are pushed in opposite directions.
Revaluation remains available
Periods in which inflation adjustment is not applied count as periods in which the conditions were not met. Depreciable assets may therefore be revalued under paragraph (Ç) of repeated Article 298 of the Tax Procedure Law, which narrows part of the gap between the books and reality.
Comparability across years
Working with adjusted 2024 statements alongside unadjusted 2025 and later statements makes year-on-year growth rates meaningless. Projections must be built at a single, consistent price level.
Methods, and when each one holds
| Approach | Fits | Breaks down | Point specific to Turkey |
|---|---|---|---|
| Income approach: discounted cash flow | Companies with predictable cash flow and an operating history; growth plans supported by financing | Irregular cash flow, single-customer dependency, weak data infrastructure | Projection and discount rate must sit in the same currency and the same price level; a nominal local-currency projection needs a nominal local-currency discount rate |
| Income approach: capitalisation of earnings | Mature, stable, low-growth businesses | Sectors with high cyclical swings | Determination of normalised earnings; removal of one-off income and expenses, including currency effects |
| Market approach: comparable companies and transactions | Sectors with listed comparables or disclosed transaction data | Niche sectors; markets where deal terms are not published | Foreign multiples need adjustment for country risk, interest levels and liquidity; control premium and minority discount must be separated out |
| Asset approach: adjusted net assets | Real estate, energy, fleet and other asset-heavy structures; dormant companies | Service businesses whose value sits in people, brand and customer relationships | While inflation adjustment is suspended, every non-monetary item must be restated within the valuation |
| Liquidation value | Wind-down, enforcement and creditor scenarios | Cases where the going concern assumption holds | Severance liability, contract termination costs and the tax effect of asset sales must be built in |
Bridge items: from enterprise value to equity value
A large share of disputes arises not from the method but from the adjustments made when moving from enterprise value to the value of a shareholding. The items most often contested in Turkey:
Net debt
- Bank loans, factoring and finance lease obligations
- Balances due to and from shareholders
- Severance pay provision and unused leave liability
- Restructured tax and social security debts
Working capital
- Determining the normal level and the effect of seasonality
- Receivables of doubtful collectability
- Slow-moving or impaired inventory
- Carried-forward value added tax and prepaid taxes
Non-operating items
- Real estate and vehicles not used in operations
- Participations and investment assets
- Items in the personal use of shareholders
- Pending litigation and guarantees given
Normalisation
- Owner remuneration above or below market level
- Related party transactions priced away from arm’s length
- One-off income, expenses and currency differences
- Effect of changes in accounting policy
Where valuation meets tax
Transfers between related parties
In intra-group transfers, a price that is not at arm’s length results in a disguised profit distribution through transfer pricing under Article 13 of the Corporate Tax Law. A valuation supporting the price is the first document requested in an examination.
Participation share sale exemption
Part of the gain on the sale of participation shares held in the assets for at least two full years is exempt from corporate tax, subject to holding the exempt portion in a special fund account and collecting the sale price within the prescribed period. The rate in the statute can be changed by presidential decision, so the rate in force at the transaction date must be confirmed.
Tax-neutral mergers and partial divisions
Transfers and divisions under Articles 19 and 20 of the Corporate Tax Law proceed at book values. The share exchange ratio and the equalisation between shareholders nevertheless require a valuation as a matter of commercial law.
Individual shareholders
Taxation of the gain on a share sale depends on the nature of the instrument and the holding period. A joint stock company whose share certificates have been printed and a limited liability company capital share are subject to different regimes on exit.
Foreign shareholders and notifications
Share transfers involving foreign investors carry separate foreign direct investment notification duties, and the valuation forms part of the supporting file the bank will expect when the consideration is transferred. See Foreign Direct Investment Law.
Merger control
Where the turnover thresholds are exceeded, clearance from the Competition Authority is a condition of validity for the acquisition. The thresholds are set by communiqué and updated periodically, so they should be checked while the deal structure is still being designed.
How the engagement runs
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Fixing the purpose, the definition of value and the valuation date
Who the report will be used against, which definition of value governs and as of which date value is determined are recorded in writing. Change any of the three and the result changes.
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Information request and assessment of data quality
Three years of financial statements and trial balances, shareholder current account detail, loan and guarantee schedules, lease and customer contracts, headcount and severance liability, litigation schedule, property and equipment register, and related party transactions.
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Adjustment and normalisation of the financial statements
One-off items are removed, non-operating assets are separated, and a consistent price level is established for periods in which inflation adjustment is not applied.
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Application of methods and sensitivity analysis
More than one approach is applied and the reasons for divergence explained. Sensitivity tables are produced for discount rate, growth and margin assumptions, so the output is a defensible range rather than a single figure.
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Report and negotiation support
The report sets out purpose, definition of value, scope limitations, data sources, assumptions and conclusion. Where required, we comment on the counterparty’s report or prepare a technical critique of a court expert report.
A valuation report is not an audit report. The exercise reaches a value conclusion on the basis of the information provided; it does not express an opinion on the accuracy of that information. Where the reliability of the data is itself in question, due diligence or an independent audit comes first.
What a defensible report contains
| Section | What it must state |
|---|---|
| Purpose and addressee | The transaction the report was prepared for and to whom it is addressed, with a restriction on use for any other purpose |
| Definition of value | Whether real value, market value, fair value, investment value or liquidation value governs, and the source of that definition |
| Valuation date | The date as of which the conclusion holds, and confirmation that later developments fall outside the scope |
| Scope and limitations | What information was provided, what was not verified, and whether a site visit was performed |
| Assumptions | The basis for growth, margin, working capital, capital expenditure and discount rate assumptions |
| Reasoning on methods | Why each approach was applied or rejected, and how the results were weighted |
| Sensitivity | How the conclusion moves when critical assumptions change |
| Statement of independence | Confirmation that the valuer has no interest in the outcome, and the professional responsibility framework applied |
Frequently asked questions
Can I calculate my company’s value with a formula?
A single formula produces an indicative range at best. A revenue or earnings multiple is a starting point where comparable sector data exists, but a figure reached without adjusting for net debt, non-operating assets, the normal level of working capital and one-off items is not a value that can be defended in a transaction.
How is real value under the Commercial Code determined?
The statute does not define real value and leaves its determination to practice. The rationale to Article 141 states that a living company must be taken as the basis when real value is calculated. In practice this means valuing on a going concern rather than a liquidation basis, at the date closest to the decision.
Is exit compensation paid on book value?
No. A departing shareholder is entitled to compensation corresponding to the real value of the capital share. Book value may be one input, but on its own it does not represent real value — particularly in periods when inflation adjustment is not applied, when the gap widens noticeably.
How is the exit right price set in a company whose shares are not traded?
A valuation report based on the value at the date the board resolution was publicly disclosed is prepared to determine the exercise price. The report, or a summary of it, is disclosed together with the agenda of the general assembly at which the transaction will be discussed.
Can we set the price freely when transferring shares within a group?
No. Transactions with related parties must be priced at arm’s length; otherwise the difference is treated as a disguised profit distribution through transfer pricing under Article 13 of the Corporate Tax Law. A valuation showing how the price was derived is the basis of the defence in an examination.
Does a valuation report have a validity period?
The report holds as of a stated valuation date. Interest levels, exchange rates, sector conditions and the company’s own results all move the conclusion. In capital markets practice, where developments affecting company value occur between the date the report is based on and the general assembly, a supplementary report is required.
Why are startups treated differently?
Where there is no historical cash flow, or it is negative, the income approach is built on scenarios; comparable transaction data is limited, and in funding rounds the headline price only makes sense read together with the protective provisions in the agreement. Presenting a scenario range rather than a single figure is the more honest output.
Is the balance sheet useless while inflation adjustment is suspended?
It is usable, but only after restatement. Since inflation adjustment does not apply for the 2025, 2026 and 2027 accounting periods, bringing non-monetary items to current values becomes part of the valuation work itself. Revaluation of depreciable assets under paragraph (Ç) of repeated Article 298 of the Tax Procedure Law also narrows the gap.
How long does a valuation take?
Where the data set is complete, a single mid-sized company typically takes two to four weeks. Group structures, operations in several countries, real estate heavy balance sheets and contested shareholder relationships extend the timetable.
Can a court expert report be challenged?
Yes. The definition of value, the valuation date, the assumptions and the internal consistency of the method can be examined and a technical counter-opinion prepared. What matters is specificity: showing which assumption is wrong and quantifying the effect of correcting it.
Primary sources
- Turkish Commercial Code No. 6102 — Article 141 (exit compensation), Article 343 (valuation of contributions in kind), Articles 493 and 597 (real value), Article 531 (dissolution for just cause), Articles 640 to 642 (expulsion and exit compensation)
- Capital Markets Board, Communiqué on Valuation Standards in Capital Markets (III-62.1) — Official Gazette, 1 February 2017, No. 29966
- Capital Markets Board, Communiqué on Significant Transactions and the Exit Right (II-23.3)
- Corporate Tax Law No. 5520 — Article 5(1)(e) (exemption on the sale of participation shares), Article 13 (transfer pricing), Articles 19 and 20 (transfers and divisions)
- Tax Procedure Law No. 213 — Article 267 (deemed value), repeated Article 298 (inflation adjustment and revaluation)
- Law No. 7571, Official Gazette of 25 December 2025 — suspension of inflation adjustment for the 2025, 2026 and 2027 accounting periods
- IFRS 3 Business Combinations and IFRS 13 Fair Value Measurement
Our business valuation service
We fix the definition of value to the purpose, normalise the financial statements and report the conclusion with a sensitivity analysis. Scope of work:
- Valuation for share transfers, incoming shareholders and shareholder exits
- Exchange ratio analysis in mergers, divisions and conversions
- Price determination and supporting file for related party transactions
- Purchase price allocation and impairment testing support
- Technical opinion on a counterparty report or a court expert report
Related pages: mergers and acquisitions, due diligence, corporate restructuring. Contact us.
