A Turkish Private Equity Web Log

In an effort to cover the Turkish Private Equity Industry - for the promotion of Entrepreneurship, the private equity asset-investment model, and the communication thereof.

Corporate Governance: Turkish Companies Need to Face the Music
One of the motivating forces behind Grandstanding Traction was my friend Erkan from Knowledge Revisited (http://governanceturkey.blogspot.com), a blog about corporate governance issues in Turkey. Erkan has a passion and deep knowledge of governance issues, and therefore a lack therof in Turkey. When it comes to evangelizing the reasons why companies should be doing the upmost to use fair and ethical practices in business, he is very motivated.

This last week, I took a look at his posts and noticed that once again Galatasaray Sportif AS (GSRAY.TI) with its parent company Futbol AS is back in the limelight over shareholders' rights. He first started covering this story in his post: Rights of minority shareholders in Turkey and two examples.... We'll have to wait and see if the Capital Markets Board (CMB), the market watchdog, will do anything, or ...eh, just watch. UPDATE: It seems the CMB has made their decison.

I can't stress this more. When investors start seeing more stories like this of contracts that fail to live up to their value in ink, Turkey will continue to have problems doing business with the rest of the world. I, myself, may even be doing harm by prolonging this story in the media, rather than just calling it a singular occurence. The problem, as Erkan can contest, is that this is not uncommon.

For the many family-owned companies in Turkey, coming to the realization that with expansion capital or turnaround investments comes the responsibility for setting up investor relations. Selling equity or debt is one thing, but the actual relations that go along with giving up control is difficult for some. In dealing with this cultural aspect, investors need to be guides as they convey the final destinations to the sons of the fathers' companies. There are thousands of SMEs in Turkey, and it will be the ones that truly see the value in corporate governance that will succeed and go on to do great things, both in Turkey and the global market.

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Posted @ 14:08  
  • At 5/01/2007 6:46 PM, Anonymous Baris said…

    Good observation! I think SMEs' awareness around different financial products (from debt or equity capital markets) will increase with such news from larger organizations i.e. Turkcell's recent $3B financing.

    I think that your point on family businesses is the main reason why local angel or VC investments are so rare. I once heard about the term called "god bosses" in TR. When god bosses, family business owners, invest in any new venture, they tend to dictate their ideas rather than letting entrepreneur to run his/her business. Hence we haven't heard many success stories. However, new start-ups such as Airties, etc. will help god bosses see the upside of the healthy investor/entrepreneur relationship.

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