What is the intended use of proceeds from the IPO and how will it affect the company's growth trajectory?

Intended use of the IPO proceeds

McKinley Acquisition Corp is a “Acquisition Corp” (i.e., a SPAC). By design, the $150 million raised in the IPO is earmarked to fund a future business‑combination transaction – essentially the cash that will be used to acquire, merge with, or otherwise invest in a target operating company. In most SPAC structures the capital is held in a trust and can only be released once a definitive acquisition is announced and approved by shareholders. Consequently, the proceeds will most likely be allocated toward:

1. Identifying and completing a target acquisition – the bulk of the cash will be used as purchase‑price equity, transaction fees, and working capital for the combined entity.
   
2. Potentially covering a modest amount of working‑capital needs or debt‑repayment of the target, but the primary driver is the deal itself rather than organic expansion.

Impact on growth trajectory

Because the cash is intended to finance a merger rather than fund incremental organic projects, the company’s growth will be “step‑up” in nature. Once a target is disclosed, the combined business can instantly inherit the target’s revenue streams, market position, and operational assets, compressing the time horizon for earnings expansion from years to months. This creates a classic “growth‑catalyst” scenario: the SPAC’s valuation will be anchored to the perceived quality and scale of the eventual acquisition. If management identifies a high‑margin, high‑growth target in a hot sector (e.g., technology, renewable energy, or specialty consumer services), the post‑combination entity could post double‑digit revenue growth and a rapid improvement in cash‑flow conversion, dramatically lifting the company’s forward‑looking multiples.

Trading implications

* Short‑term: The IPO price of $10.00 per unit provides a clear baseline. In the absence of a announced target, the stock will likely trade in a tight range as investors price‑price the probability of a successful deal. Expect modest volatility, with the price staying near the trust‑value floor unless speculative chatter about a candidate emerges.

* Medium‑term: The catalyst window is the “deal‑deadline” (typically 18–24 months). Any credible hint of a target—press releases, insider moves, or sector‑specific news—should trigger a price rally, as the market re‑prices the expected earnings uplift. Conversely, a missed deadline or a weak target will pressure the stock toward the $10.00 floor.

* Actionable: Maintain a long‑biased stance with a tight stop just below the $10.00 trust floor (e.g., $9.70) to protect against a “deal‑failure” sell‑off. Accumulate on pull‑backs if the market over‑discounts the SPAC’s probability of closing a high‑quality transaction, and consider scaling out on the first clear acquisition announcement, where upside can be locked in before the combined entity’s post‑deal volatility expands.