The Kapali Carsi

Private Equity and the Turkish Zuckerberg

You don’t need to be an economist to know that Turkey is small and medium enterprise (SME) country; spending a weekend in the country would be more than enough. Unfortunately, only 20 percent of these companies last more than a decade, according to Kamil Yılmaz of Koç University.

In his welcome speech to the conference “Turkish Experience with Private Equity” on April 5, he noted that most SMEs shut down because they are not able to make use of economies of scale by growing, and also have problems during the transition from the founding first to the second generation. According to the World Bank’s latest report on Turkey, which has yet to be published, Turkish companies have difficulty in developing new technologies.

Here’s is the intro. to a recent Hurriyet Daily News (HDN) column of mine, where I wrote about my impressions of a half-day Koc University event on Turkish equity. You can read the whole thing at the HDN website. The column is not really a summary of the Turkish private equity landscape; if you are more interested in that, I could refer you to a couple of recent Bloomberg and Reuters articles. The Bloomberg one is about M&A, but you can understand from there why private equity is expected to slow down this year as well. But note that deals have not come to a full stop.

Before I go on, a small correction is in order: Kamil Yilmaz notified me that I had misquoted him: He told me he actually said that 40 percent, not 20 percent as I had reported, of SMEs actually last more than a decade. He added that for large firms, this ratio is 70 percent. I apologize for the honest mistake, but as he noted  as well, it doesn’t change the main message that Turkish SMEs do not last. And it seems that I had a bit exaggerated his optimism; he notified me that he wanted a discussion of the conditions under which manufacturing would attract private equity and what kind of policies would be useful. And that happened during the conference. And according to this criterion, my column might have been helpful as well, so I am glad:)

Finally, while researching for the column, I stumbled upon an interesting article in the Wall Street Journal about Peak Games and its founder Sidar Sahin.

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