The question
How do you go from a universe of several thousand companies to a dozen targets worth a first look, without selection bias and in a reproducible way?
Method
- Consolidation of several financial databases: identifier cleaning, currency and fiscal-year alignment.
- Successive filters on simple ratios a committee can read:
- size (revenue),
- profitability (EBITDA margin, ROCE),
- structure (net debt / EBITDA),
- resilience (interest coverage),
- momentum (revenue growth).
- Composite score to rank the survivors, with explicit weights.
Takeaways
- Coverage ratios often eliminate more cases than margin does.
- A filter is only worth something if you can explain why a company was excluded.
- The shortlist is not a conclusion: it is the list of files to open.
The Deal Desk "Sourcing" module reproduces this logic on an illustrative universe of 6,819 companies.