The increasing spend by Turkish consumers has made the Turkish retail sector an M&A hotspot. This, coupled with increasing internet penetration in Turkey, is making foreign investors consider the Turkish e-commerce sector as a prominent investment opportunity.
Online Payments in Turkey - 2008-2013
Source: BKM - Interbank Card Center
Since 2008, online payments have increased by 30.9% CAGR reaching to around TRY 40bn online in transaction value, while e-commerce volume rose by 23.6% to c. 200mn transactions in 2013.
Given the expectations of this upward trend, many websites have already received investments from both financial and strategic investors. Investors' demand varied depending mainly on the sales performance, business model, product range, service quality and brand recognition of the websites.
Remarkable Cross-border E-commerce M&A/Private Equity Transactions
Considering recent e-commerce trends, it is reasonable to assume that websites will need better search engine optimization (SEO), customized products, free/fast delivery and other value added services to get an edge over competition.
Moreover, mobile/tablet compatibility should be considered a must-have as "Showrooming" has recently become popular in Turkey. Significant numbers of websites have been on the radar of financial investors, and strategic investors are also expected to realize synergies mainly via international expansion.
Bridge Approach on International Expansion
In addition to the upward trend in consumer demand, Turkey's unique geographic position offers many advantages for strategic investors. Combining geographic benefits with e-commerce will lead to three potential synergies.
Firstly, companies seeking international expansion from Europe to Middle East or vice-versa will have an opportunity to realize it through Turkey, where they can establish logistics and inventory management structures for their further expansion.
Secondly, due to the cultural mix of European and Middle eastern life-styles, the consumer profile in Turkey will give valuable insights about target consumer preferences while facilitating smooth expansion toward those territories.
Thirdly, entrepreneurs seeking to launch their products in Turkey but lacking optimum locations may realize their goals via e-commerce M&A where total costs/risks may be even less than the traditional brick-and-mortar retail approach.
With these alternatives leading to long-lasting interest of strategic buyers, financial investors are getting even more excited as exit opportunities are vast in the Turkish e-commerce market. However, no matter how good the circumstances are, timing is crucial to succeed in e-commerce M&A for both sell-side and buy-side.
In this respect, an M&A professional with a pragmatic approach will come in useful. Having such a professional seeking win-win strategy with optimum terms (rather than rushing to close any deal) will get you the best outcome.
The possibilities are endless. Despite the crowd, you can still be an e-mportant player on M&A, where M stands for Money-making and A for Adventure.
For further information: mergerturkey@gmail.com
