Financial screening ranks the numbers, not the businesses
A corporate development team at a strategic acquirer had a long list of industrial companies it might buy, and the budget to look properly at only a few of them. The expensive part of an acquisition is not the diligence itself. It is committing that budget before you know which target deserves it.
The list had been built from financial criteria, which selects for what is visible in the accounts. Accounts cannot separate a durable position from figures that look flattering for reasons that will not last. What the team needed was not depth on one name. It was enough operator perspective on each candidate to reorder the list, at a cost that made sense across the whole list.
We built a screening layer, not a diligence program
We scoped short expert calls against one consistent set of questions, applied to every candidate on the list, so the reads could be compared with each other. We spoke to former operators, customers and former commercial leads, the people who have worked in these companies or bought from them and can say whether a position is durable.
The discipline was resisting depth. A screening read that turns into a small diligence on the most interesting candidate defeats the point, which is to rank the whole list on one basis. Conflicts were mapped across the full candidate list up front rather than target by target, since companies in one sector share the same operators. Every expert cleared the Nextyn compliance framework before scheduling.
The list came back reordered, and the budget followed it
Several candidates that screened well on the financials moved down the list, for reasons no filing would have shown. The whole screening layer cost well below what proper diligence on a single target costs, so the return was in what the team did not spend.
The team put its diligence budget behind the targets the screen had promoted. The short reads were not thrown away either: they became the starting point for the deeper work on the candidates that survived, so nothing had to be repeated.
