What are the key valuation metrics (e.g., EV/EBITDA, price‑to‑earnings) that the market will use to price the post‑combination entity?

Key valuation levers the market will focus on

When a SP‑capped vehicle like McKinley Acquisition Corp (MKLYU) closes its business combination, investors will price the new entity using the same multiples that drive comparable public‑company valuations in the target’s sector. The primary metrics will be Enterprise Value‑to‑EBITDA and price‑to‑earnings (P/E), because they capture operating profitability and earnings power, respectively. In a SP‑AC context, analysts also scrutinise EV‑to‑Revenue (especially for early‑stage or high‑growth targets where EBITDA may be thin) and EV‑to‑Free‑Cash‑Flow for cash‑generating businesses. For growth‑oriented targets, the market will additionally look at price‑to‑sales (P/S) and EV‑to‑EBIT to capture value before earnings become stable. The chosen multiple will be anchored to the most comparable peer group (e.g., the relevant sub‑industry REIT, tech, or industrial cohort) and adjusted for the SP‑AC’s “cash‑plus‑acquisition‑premium” buffer (the $150 M IPO proceeds plus any rollover equity).

Trading implications

Investors will watch the target’s disclosed EBITDA, net income and cash‑flow metrics when the combination is announced; the market will back‑solve an implied EV based on the prevailing sector multiples (e.g., a 12‑x EBITDA for mid‑cap industrials, 30‑x EV/Revenue for high‑growth tech, or 20‑x P/E for mature earnings generators). The implied EV/EBITDA and P/E derived from the deal terms become the benchmark for post‑combination trading. Consequently, any deviation of the disclosed EV from the “fair‑value” range implied by those multiples creates an immediate trading edge: a lower‑than‑expected EV/EBITDA (i.e., the target trades at a discount to peers) can signal a buying opportunity, whereas a premium EV/EBITDA (above peer multiples) may warrant short‑term caution or a wait‑and‑see on integration risk. Keep an eye on the post‑combination stock’s price‑to‑book and net‑debt‑to‑EBITDA as secondary filters—high leverage or a steep discount to book can amplify volatility. In practice, the market will price the combined entity around the mid‑point of the comparable‑company EV/EBITDA and P/E ranges, with a modest premium (≈5‑10 %) for the SP‑AC’s liquidity cushion, providing a clear reference point for entry/exit levels.