Discovering hidden liabilities after acquiring a Turkish company? Learn how foreign buyers can pursue warranty claims, indemnification, purchase-price compensation, fraud remedies and post-closing M&A litigation in Turkey.

A foreign investor may complete the acquisition of a Turkish company believing that the most difficult part of the transaction is over. The purchase price has been paid, the shares have transferred, management control has changed and the buyer begins operating the business.

Several months later, problems emerge.

The target company receives a substantial tax assessment relating to periods before closing. Previously undisclosed supplier debts appear. Important customers dispute receivables shown in the financial statements. Employees bring claims arising from the seller’s management period. A regulatory investigation surfaces. Intellectual property supposedly owned by the target turns out to belong to a founder or related company.

The foreign buyer may then discover that the business it acquired is materially different from the business described during negotiations.

These situations frequently lead to post-closing M&A disputes.

The central questions are usually whether the seller breached representations and warranties, whether a specific indemnity applies, whether the liability was properly disclosed, how much loss the buyer has suffered and whether contractual deadlines for bringing the claim are still open.

Turkey’s Ministry of Trade confirms in its 2026 foreign-investment guide that foreign investors can acquire shares in companies already established in Turkey. The formal mechanics of share transfers differ between joint-stock and limited liability companies. (https://ticaret.gov.tr)

What Is a Post-Closing M&A Dispute?

A post-closing dispute arises after an acquisition has been completed.

Unlike a pre-closing dispute, the buyer already owns some or all of the target company’s shares.

The objective is therefore often not to stop the acquisition. Instead, the foreign buyer typically seeks compensation for a problem that existed before closing but became known afterward.

The Share Purchase Agreement, disclosure letter, due diligence materials and closing documents become critical.

Hidden Liabilities Discovered After Closing

Hidden liabilities are among the most common causes of post-acquisition disputes.

Examples can include undisclosed tax debts, bank liabilities, supplier claims, employee claims, litigation, regulatory penalties, environmental liabilities, social security exposure, guarantees, related-party debts and contractual obligations.

The key question is not simply whether a liability appeared after closing.

The buyer must determine whether the liability existed or originated before closing and whether the seller assumed responsibility for it under the SPA.

Hidden Tax Liabilities

Consider a foreign investor that acquires 100% of a Turkish company.

Eight months after closing, the target receives a significant tax assessment relating entirely to transactions undertaken two years before the acquisition.

The buyer should immediately examine the SPA’s tax warranties and any specific tax indemnity.

Many sophisticated acquisition agreements distinguish between general warranties and specific indemnities.

If the seller expressly agreed to bear pre-closing tax liabilities, the buyer may have a strong contractual recovery mechanism.

Undisclosed Supplier Debt

Suppose the closing balance sheet shows EUR 500,000 of supplier liabilities.

After closing, the buyer discovers another EUR 900,000 of unpaid invoices that existed before completion.

The investigation should establish whether those liabilities were reflected in the accounts, disclosed in the data room or included in the purchase-price adjustment.

If they were concealed and the SPA contained an appropriate warranty, a contractual claim may arise.

Employee Claims After Acquisition

Employee liabilities can also emerge long after closing.

A former employee may bring a claim relating to overtime, severance, workplace rights or another issue arising before the acquisition.

The buyer should determine which period generated the liability and how employment risks were allocated under the SPA.

The fact that the lawsuit was filed after closing does not necessarily mean the underlying risk arose after closing.

Undisclosed Litigation

The seller may have warranted that no material litigation, arbitration or administrative investigation was pending or threatened.

After closing, the buyer may discover proceedings that existed before the acquisition.

The SPA should be compared with the disclosure letter and due diligence materials.

If the litigation was properly disclosed, the seller may rely on that disclosure.

If it was deliberately withheld, the buyer’s position may be substantially stronger.

Representations and Warranties in Turkish M&A Transactions

Representations and warranties allocate transaction risk between buyer and seller.

They commonly address the target company’s corporate status, financial statements, assets, taxes, litigation, employees, intellectual property, regulatory compliance, material contracts, insurance, debt and related-party transactions.

A post-closing claim frequently begins with a simple comparison:

What did the seller warrant, and what was the actual position at closing?

The exact wording matters enormously.

Financial Statement Warranty Claims

Suppose the seller warranted that the company’s financial statements accurately reflected its financial position.

After closing, the foreign buyer discovers fictitious receivables, understated liabilities and artificially inflated revenue.

The buyer should identify each inaccurate accounting item separately.

A general allegation that “the financial statements were false” is less useful than demonstrating precisely which figures were inaccurate, why they were inaccurate and how those inaccuracies affected the acquisition price.

Accounts Warranty Versus Business Performance

A warranty that historical financial statements were accurate does not necessarily guarantee future profitability.

This distinction is essential.

Suppose the company’s financial statements were entirely accurate at closing, but revenue falls 40% six months later because a major customer leaves.

That commercial deterioration does not automatically constitute breach of the historical accounts warranty.

The buyer must connect the claim to the contractual representation actually given by the seller.

Disclosure Letter Can Defeat a Warranty Claim

Foreign buyers should never examine warranties without reviewing the disclosure letter.

Suppose the SPA states that no material litigation exists.

The disclosure letter specifically identifies a EUR 2 million pending lawsuit.

The buyer may have difficulty later arguing that the existence of that lawsuit breached the general warranty.

The real dispute may instead concern whether the disclosure was sufficiently clear and whether the seller accurately described the risk.

Data Room Disclosure

Another frequent dispute concerns whether uploading a document into the data room constituted adequate disclosure.

The seller may argue:

“The document was in the data room. You knew about the liability.”

The buyer may respond:

“The document was buried among thousands of files and the seller expressly warranted that no such liability existed.”

The answer depends heavily on the SPA’s disclosure standard.

Some agreements expressly define what constitutes disclosed information.

The data room index, upload dates and Q&A record should therefore be preserved.

General Warranties and Specific Indemnities

These should not be confused.

A warranty generally concerns the accuracy of a statement about the target.

A specific indemnity may allocate responsibility for a known or specifically identified risk.

Suppose due diligence identifies an ongoing tax investigation.

The buyer agrees to proceed but requires the seller to indemnify it against any liability arising from that investigation.

If a tax assessment later occurs, the buyer may rely primarily on the specific indemnity rather than attempting to establish a general warranty breach.

Why Specific Indemnities Are Valuable

A carefully drafted indemnity can reduce disputes over how loss should be measured.

The parties have already identified the risk and allocated responsibility.

Common specific indemnities can concern tax investigations, litigation, environmental risks, employee disputes, regulatory issues and known contractual claims.

The exact wording remains critical.

Warranty Claim Notification

One of the biggest mistakes foreign buyers make is waiting too long before formally notifying the seller.

An SPA may require the buyer to notify warranty claims within a specific period.

The notice may need to explain the facts, identify the breached warranty and provide an estimate of the loss.

Sending a casual email saying:

“We discovered several problems and hold you responsible”

may not necessarily satisfy the contractual requirements.

The notice clause should be followed precisely.

Contractual Time Limits

SPA warranties frequently survive for defined periods after closing.

Different warranties can have different survival periods.

General business warranties may expire relatively quickly, while tax, title or fundamental warranties may remain actionable for longer.

The buyer should therefore prepare a warranty schedule immediately after discovering a problem.

For each claim, identify the relevant warranty, contractual expiration date, notice requirements and applicable statutory limitation rules.

De Minimis Threshold

Some SPAs provide that claims below a specified amount cannot be pursued.

For example, individual claims below EUR 10,000 may be disregarded.

This prevents minor operational issues from becoming acquisition disputes.

However, several related claims may sometimes need to be considered together depending on the contract.

Basket Threshold

A basket requires qualifying warranty claims to reach an aggregate threshold before the seller becomes liable.

Suppose the basket is EUR 250,000.

The buyer identifies qualifying losses of EUR 100,000, EUR 80,000 and EUR 120,000.

The aggregate amount exceeds the threshold.

Whether the buyer can recover the entire amount or only the portion exceeding the threshold depends on whether the SPA uses a tipping basket or deductible structure.

Liability Cap

The seller’s liability may also be capped.

For example, general warranty liability may be limited to 20% of the purchase price.

Fundamental warranties may have a higher cap.

Tax liabilities may be governed separately.

Claims involving deliberate misconduct may also require different analysis.

The liability regime should therefore be mapped before litigation begins.

Hidden Debt and Purchase Price Adjustments

Not every undisclosed debt automatically becomes a warranty claim.

Many M&A transactions calculate the final purchase price using cash, debt and working-capital adjustments.

If a liability should have been included in closing debt but was omitted, the buyer may have a purchase-price adjustment claim rather than, or in addition to, a traditional warranty claim.

The SPA’s pricing mechanism should be examined carefully.

Completion Accounts Disputes

Some acquisitions use completion accounts prepared after closing.

The parties may disagree about working capital, cash, debt or accounting policies.

The SPA may provide that such disputes are determined by an independent accountant rather than a court or arbitral tribunal.

This distinction is important.

A technical accounting disagreement may be subject to expert determination while a breach-of-warranty dispute under the same SPA may be subject to arbitration.

Locked-Box Leakage Claims

Where a transaction uses a locked-box pricing mechanism, the seller may undertake that no unauthorized value will leave the target between the locked-box date and closing.

Potential leakage can include dividends, management fees, payments to related parties or other transfers benefiting the seller.

If prohibited leakage is discovered after closing, the buyer should examine the SPA’s leakage provisions.

These claims can operate differently from ordinary warranty claims.

Related-Party Payments Discovered After Closing

Suppose the buyer discovers that the target paid substantial “consultancy fees” to another company controlled by the seller immediately before closing.

The investor should examine the agreements, invoices, services supposedly provided and bank transfers.

The transaction may raise questions concerning leakage, financial statement accuracy, related-party warranties or deliberate concealment.

The correct contractual classification can affect recovery.

Hidden Guarantees

A particularly dangerous liability involves guarantees given by the target for another person’s obligations.

The buyer may acquire what appears to be a debt-light company and later discover that it guaranteed substantial obligations of an affiliated company.

The SPA should be examined for warranties concerning guarantees, security interests and off-balance-sheet liabilities.

The financial impact can be significant even if the guarantee has not yet been called.

Intellectual Property Problems

Post-closing disputes are not limited to financial liabilities.

A technology investor may discover that software supposedly owned by the target was actually developed and owned personally by a founder.

A manufacturer may discover that an essential trademark belongs to another group company.

The buyer should compare the SPA’s intellectual-property warranties with registration records, employment agreements and licensing arrangements.

Regulatory and Licensing Problems

A seller may warrant that all licenses and regulatory approvals required for the business are valid.

After closing, the buyer may discover that an essential permit expired or that the company had been operating contrary to regulatory requirements.

The buyer should determine whether the problem existed at closing and whether it falls within the warranty language.

Potential future loss should also be distinguished from loss already suffered.

Environmental Liabilities

Industrial acquisitions can involve environmental risks that remain undiscovered during ordinary financial due diligence.

Contamination, waste-management violations or historical environmental obligations can create substantial post-closing costs.

The SPA may contain specific environmental warranties or indemnities.

Where the risk was identified before closing, responsibility may have been expressly allocated between the parties.

Fraud and Deliberate Concealment

Some post-closing disputes go beyond ordinary warranty breaches.

Suppose internal emails obtained after closing show that the seller knew about a EUR 3 million liability and deliberately instructed management not to disclose it to the foreign purchaser.

That evidence may support a substantially different case from an innocent accounting error.

Intentional deception can potentially engage Articles 36 and 39 of the Turkish Code of Obligations.

The Ministry of Trade’s current company-law legislation page confirms that Code of Obligations No. 6098 remains among the principal statutes relevant to the corporate legal framework in 2026. (https://ticaret.gov.tr)

One-Year Period for Deception Claims

Where intentional deception is relied upon, Article 39 creates an important timing issue.

The affected party generally must exercise the relevant avoidance right within one year from discovering the deception.

This does not mean every post-closing M&A claim has a one-year deadline.

Warranty claims, indemnity claims and contractual compensation claims can operate under different contractual and statutory periods.

Each claim must be calculated separately.

Should the Buyer Keep the Company or Unwind the Acquisition?

This is a major strategic decision.

Suppose the foreign investor paid EUR 20 million for a company that remains worth EUR 17 million despite undisclosed liabilities.

The investor may prefer to keep the business and seek compensation.

In another case, the buyer may discover that the company’s entire business model was misrepresented and conclude that it would never have completed the transaction.

Avoidance or another unwinding remedy may then deserve consideration.

The legal strategy should reflect the commercial objective.

Compensation for Hidden Liabilities

The buyer’s loss may equal the cost of satisfying an undisclosed liability.

But not always.

The SPA may define loss differently.

It may exclude indirect or consequential losses.

It may regulate diminution in share value, tax benefits, insurance recoveries and double recovery.

The damages calculation should therefore begin with the SPA’s definition of recoverable loss.

No Double Recovery

Suppose an undisclosed EUR 1 million liability was already reflected in a purchase-price adjustment.

The buyer should not ordinarily expect to recover the same EUR 1 million again as a warranty claim.

Likewise, if insurance fully compensates a particular loss, the SPA may require that recovery to be taken into account.

Double-recovery provisions should be reviewed carefully.

Mitigation of Loss

The seller may argue that the buyer failed to take reasonable action to limit the damage.

For example, the buyer discovers a contractual claim against the target but allows it to grow substantially without taking action.

Whether mitigation obligations apply and how they affect recovery depends on the contract and applicable law.

The buyer should therefore manage the underlying liability carefully while pursuing the seller.

Third-Party Claims

Many hidden liabilities arise because a third party brings a claim against the target.

The SPA may require the buyer to notify the seller and allow the seller to participate in or control the defense.

This frequently occurs with tax and litigation indemnities.

The buyer should not settle a major third-party claim without first checking whether doing so could prejudice its indemnification rights.

Escrow Claims

If part of the purchase price remains in escrow, the buyer may have an immediate practical source of recovery.

The escrow agreement should be reviewed alongside the SPA.

The buyer may need to notify both the seller and escrow agent before a specified date to prevent release of the funds.

Escrow deadlines can therefore be just as important as litigation deadlines.

Warranty and Indemnity Insurance

Some larger transactions use warranty and indemnity insurance.

Where such coverage exists, the buyer should notify the insurer promptly and follow the policy’s claims procedure.

The existence of insurance does not necessarily eliminate claims against the seller.

The SPA and insurance policy must be analyzed together.

Can the Seller’s Assets Be Protected Against Dissipation?

Potentially.

Where the foreign buyer has a substantial monetary claim and there is evidence creating a genuine recovery risk, provisional attachment or other interim judicial measures may need to be considered, subject to the applicable statutory requirements.

Asset protection should be evaluated early.

Waiting until final judgment can be commercially dangerous if the seller is already disposing of assets.

Arbitration in Post-Closing M&A Disputes

Cross-border SPAs frequently contain arbitration clauses.

The parties may choose Turkish law but require disputes to be resolved through arbitration.

Before filing a commercial lawsuit, the foreign buyer should review the dispute-resolution clause.

The SPA may also contain different mechanisms for different disputes.

Accounting adjustments may go to an independent expert while warranty claims go to arbitration.

Corporate Claims May Be Separate From SPA Claims

After closing, the buyer is also a shareholder.

Suppose the seller retains 30% of the company and remains a director.

The buyer later discovers both pre-closing misrepresentation and post-closing diversion of company assets.

These are different problems.

The pre-closing issue may create SPA warranty or fraud claims.

The post-closing conduct may create shareholder or director-liability claims.

Both should be pursued through the appropriate legal framework.

Practical Example: Hidden EUR 4 Million Liability

Assume a foreign investor acquires 80% of a Turkish company for EUR 15 million.

The SPA contains financial statement, tax, litigation and undisclosed-liability warranties.

Nine months after closing, the buyer discovers EUR 4 million of liabilities relating to the pre-closing period.

EUR 1.5 million relates to tax exposure.

EUR 1 million relates to undisclosed supplier debt.

EUR 900,000 concerns pending litigation.

EUR 600,000 relates to a guarantee given for an affiliated company.

The buyer should not simply send the seller a demand for EUR 4 million.

Each liability should be mapped against the SPA separately.

The tax exposure may fall under a specific indemnity.

Supplier debt may constitute a financial statement or undisclosed-liability warranty claim.

The lawsuit may fall within a litigation warranty.

The guarantee may constitute a separate breach.

Each claim can have a different contractual cap, threshold and notice requirement.

Immediate Action Plan for Foreign Buyers

The buyer should first secure the SPA, disclosure letter, closing documents, data room and due diligence records. Next, every newly discovered liability should be entered into a claim matrix identifying the amount, origin date, relevant warranty or indemnity, disclosure status, contractual deadline and supporting evidence.

The buyer should then issue any required contractual notices before the relevant deadlines expire.

Financial and legal experts should quantify the loss and establish whether the problem existed before closing.

If deliberate concealment is suspected, preserve internal emails and other lawful evidence showing what the seller knew.

Finally, assess whether the seller has sufficient assets to satisfy the claim and whether interim protection is required.

Frequently Asked Questions

Can a foreign buyer claim compensation for hidden liabilities after acquiring a Turkish company?

Potentially, yes. The SPA’s warranties, indemnities and disclosure provisions are usually central to determining seller liability.

What is a breach of warranty in an M&A transaction?

It generally arises where a contractual statement concerning the target company was inaccurate in circumstances creating liability under the SPA.

What if the seller disclosed the liability in the data room?

The effect depends on the SPA’s disclosure standard and what information was actually provided. Data-room disclosure does not automatically defeat every claim.

Can hidden tax liabilities be recovered from the seller?

Potentially. Tax warranties and specific tax indemnities should be reviewed carefully.

Can the buyer recover undisclosed company debt?

Potentially, where the debt falls within a warranty, indemnity, purchase-price mechanism or other contractual protection.

Can I claim if false financial statements caused me to overpay?

Potentially. The buyer may need accounting and valuation evidence demonstrating both the misstatement and its effect on the purchase price.

Can I cancel the acquisition because liabilities were concealed?

Potentially in sufficiently serious circumstances, particularly where an applicable contractual or statutory basis exists. Unwinding a completed acquisition requires careful analysis.

What if the seller deliberately hid the liabilities?

Intentional deception may create additional remedies beyond ordinary warranty claims. Relevant statutory deadlines should be considered promptly.

Can I freeze the seller’s assets?

Potentially, where the requirements for an applicable provisional attachment or interim measure are satisfied.

Does an arbitration clause prevent proceedings in Turkish courts?

It can require substantive contractual disputes to be resolved through arbitration, depending on its scope. Interim measures and corporate-law issues require separate analysis.

Client-Focused Legal Support for Post-Closing M&A Disputes

Post-closing acquisition disputes should be approached liability by liability rather than as one general complaint against the seller.

Every hidden debt, tax exposure, litigation risk, financial misstatement or regulatory problem should be connected to the relevant warranty, indemnity, disclosure obligation or purchase-price provision.

The transaction structure also matters. Turkey’s Ministry of Trade confirms in its 2026 foreign-investment guide that foreign investors may acquire shares in existing Turkish companies and that the mechanics of share transfers differ depending on the corporate form. (https://ticaret.gov.tr)

For foreign buyers, speed is particularly important because an SPA may contain strict warranty-survival periods, claim-notification requirements, escrow deadlines and contractual liability limitations. Intentional-deception claims can introduce separate statutory timing considerations.

Depending on the circumstances, a post-closing M&A strategy may therefore combine breach-of-warranty claims, specific indemnities, hidden-liability compensation, purchase-price adjustments, escrow claims, forensic accounting, fraud-related remedies, interim asset protection, arbitration and commercial litigation.

Fırat Fesih Kaya Law Office assists foreign buyers, multinational companies and international investors with post-closing M&A disputes, hidden liabilities, breach-of-warranty claims, tax indemnities, false financial statements, purchase-price disputes, seller misrepresentation, investment recovery and cross-border corporate litigation in Turkey.

Phone: +90 312 434 22 22
Mobile: +90 532 769 22 22
Email: info@firatfesihkaya.av.tr
Address: Mevlana Boulevard No: 221, Yıldırım Tower, Balgat, Çankaya, Ankara, Turkey