We develop a method to identify the spectroscopic signature of unresolved L-dwarf ultracool companions, which compares the spectra of candidates and their associated control stars using spectral ratio differences and residual spectra. We present SpeX prism-mode spectra (0.7-2.5 micron) for a pilot sample of 111 mid M dwarfs, including 28 that were previously identified as candidates for unresolved ultracool companionship (a sub-sample from Cook et al. 2016; paper 1) and 83 single M dwarfs that were optically colour-similar to these candidates (which we use as `control stars). We identify four candidates with evidence for near-infrared excess. One of these (WISE J100202.50+074136.3) shows strong evidence for an unresolved L dwarf companion in both its spectral ratio difference and its residual spectra, two most likely have a different source for the near-infrared excess, and the other may be due to spectral noise. We also establish expectations for a null result (i.e. by searching for companionship signatures around the M dwarf control stars), as well as determining the expected outcome for ubiquitous companionship (as a means of comparison with our actual results), using artificially generated unresolved M+L dwarf spectra. The results of these analyses are compared to those for the candidate sample, and reasonable consistency is found. With a full follow-up programme of our candidates sample from Cook et al., we might expect to confirm up to 40 such companions in the future, adding extensively to the known desert population of M3-M5 dwarfs.
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