Month of truth

The long-awaited uptick of activity this month consists in part of deals that have laboured to conclusion, such as Silverfleet's acquisition of sausage casings business Kalle from Montagu, in addition to add-ons, or platform acquisitions for future buy-and-builds. Is this finally evidence of the "green shoots" that have long been hinted at in the mainstream press? It is certainly being touted by many as evidence that we have reached the bottom of the cycle.

But September is not just important due to the relative boom in dealflow: Germany's elections are due at the end of the month, which could prove a factor in the industry's posterity. The scrappage scheme has just run out and there are fears that post-election politicians will be less inclined to pump capital into the economy.

Whoever gets elected, the activist (or populist) approach of stuffing the pockets of failing companies with money is likely to dissipate. A more prudent approach may well take hold once the cameras are switched off. Propped up by political measures, many industries have struggled on, but some are suggesting we have reached the point where something has got to give.

If demand does not pick up spectacularly and over several quarters, many firms will need to downsize their production and let people go, with the knock-on effects felt through the whole economy. Investors may find rich pickings among struggling companies, but they will also likely still need all their skills to get their investments through what could be a difficult final leg of the crisis.

Yours sincerely,

Mareen Goebel

Editor, Deutsche unquote"

Tel: +44 20 7004 7462

mareen.goebel@incisivemedia.com.

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