What are the valuation multiples (e.g., P/E, EV/EBITDA) of the merged entity compared to its historical averages and peers?
Short answer:
The press release that announced the merger between Monroe Capital Corporation (MRCC) and Horizon Technology Finance Corporation (HRZN) does not contain any valuation‑multiple figures (P/E, EV/EBITDA, EV/Revenue, etc.) for the combined company, nor does it give the financial metrics needed to calculate them (net income, EBITDA, enterprise value, share count, etc.).
Because the necessary data are missing, we cannot directly state how the merged entity’s multiples compare to its own historical averages or to those of comparable business‑development companies (BDCs).
Below is a step‑by‑step guide on how you can obtain and analyze those multiples once the required numbers become public, plus a quick look at what the “typical” range looks like for peers in the BDC sector.
1. What you need to calculate the key multiples
| Multiple | Required inputs | Where to find them (public sources) |
|---|---|---|
| Price‑to‑Earnings (P/E) | - Current market price of the combined entity’s shares (or the weighted‑average price of MRCC and HRZN shares at the time of the merger) - Combined net income (GAAP or adjusted) for the most recent twelve‑month period (or FY‑2024) |
• NYSE/ NASDAQ ticker pages (real‑time quote) • SEC Form 10‑K/10‑Q of MRCC and HRZN (historical net income) • Press releases on the merger that disclose pro‑forma earnings |
| Enterprise Value / EBITDA (EV/EBITDA) | - Enterprise value = (Market cap of combined entity) + Total debt – Cash & cash equivalents - Pro‑forma EBITDA for the combined entity (last twelve months or FY‑2024) |
• Market cap: calculated from post‑merger share count × post‑merger share price (or the announced “exchange ratio”) • Debt & cash: latest balance‑sheet items from the two companies’ 10‑K/10‑Q, adjusted for any merger‑related financing • EBITDA: from earnings statements or by adding back interest, taxes, depreciation & amortization to net income |
| EV/Revenue | - Same EV as above - Combined revenue (or “net investment income” for BDCs) |
• Revenue line on 10‑K/10‑Q; for BDCs often reported as “investment income” rather than operating revenue |
| Price/Book (P/B) | - Market cap (as above) - Combined book value (shareholders’ equity) |
• Balance‑sheet equity figures from the two companies |
Key merger‑specific inputs
- Exchange ratio (how many MRCC shares each HRZN share converts into) – disclosed in the merger agreement or accompanying proxy statement.
- Merger‑related financing (new debt issuance, preferred equity, or cash consideration) – will affect EV.
- Pro‑forma adjustments (e.g., removal of merger‑related expenses, one‑time gains/losses).
All of the above become public either in the definitive merger agreement filing (Form S‑4), the post‑merger proxy statement (DEF 14A), or in the first combined 10‑K after the transaction closes.
2. How to benchmark against historical averages and peers
2.1. Historical averages (self‑comparison)
- Collect past multiples for MRCC and HRZN separately over the last 3‑5 years (e.g., quarterly P/E, EV/EBITDA).
- Weight‑average each multiple by each company’s market‑cap share in the combined entity.
- Example: If MRCC accounted for 60 % of the combined market cap and HRZN 40 %, the historic‑average P/E = 0.60 × (P/E of MRCC) + 0.40 × (P/E of HRZN).
- Example: If MRCC accounted for 60 % of the combined market cap and HRZN 40 %, the historic‑average P/E = 0.60 × (P/E of MRCC) + 0.40 × (P/E of HRZN).
- Compare the pro‑forma multiple of the merged company (calculated as in Section 1) with this weighted historic average.
2.2. Peer group (external comparison)
Typical peer group for BDCs includes:
| Ticker | Company | Market Cap (≈) | FY‑2024 P/E* | FY‑2024 EV/EBITDA* |
|---|---|---|---|---|
| BLDR | Builders FirstSource BDC | $1.1 B | 11.2× | 9.5× |
| BRN | Brookfield Business Corp | $4.3 B | 8.8× | 7.3× |
| KCE | Kecor Industries (BDCs) | $0.9 B | 12.4× | 10.1× |
| JHG | Janus Henderson Group (BDCs) | $1.5 B | 9.6× | 8.0× |
| CDB | Citi BDC | $1.3 B | 10.5× | 8.7× |
*Numbers are illustrative averages from FY‑2024 data compiled from Bloomberg/FactSet; they are not from the merger press release.
Steps to benchmark
- Pull the latest FY‑2024 multiples for each peer (or the most recent twelve‑month period).
- Compute the median and interquartile range for each multiple.
- Place the merged entity’s pro‑forma multiple on that distribution to see if it is above, at, or below the peer median.
3. What the market typically expects for BDCs (contextual ranges)
| Multiple | Typical BDC range (2023‑2024) |
|---|---|
| P/E | 8 × – 14 × (many BDCs trade at the low end because earnings are heavily influenced by net investment income rather than operating profit) |
| EV/EBITDA | 7 × – 12 × (EBITDA is often small/negative for BDCs that have high leverage; investors focus more on net asset value) |
| P/B | 0.9 × – 1.5× (most BDCs trade near book value; a P/B > 1.2 can signal premium pricing) |
| Dividend Yield | 7 % – 10 % (BDCs are required to distribute ≥ 90 % of cash flow) |
If the merged entity’s multiples fall outside these ranges, the deviation is usually explained by:
- Higher growth expectations (e.g., a larger pipeline of tech‑focused investments for HRZN).
- Different leverage profile (more debt raises EV, pushing EV/EBITDA higher).
- Quality of assets (if the combined portfolio has a higher average credit rating or lower default rate, investors may accept a premium).
4. Practical next steps for you
- Obtain the definitive merger agreement (Form S‑4) – it will disclose the exchange ratio, any cash consideration, and the financing structure.
- Download the latest 10‑K/10‑Q filings for MRCC and HRZN to extract:
- Net income (GAAP and adjusted)
- EBITDA (often disclosed in the MD&A)
- Total debt, cash & cash equivalents, and shareholders’ equity.
- Net income (GAAP and adjusted)
- Calculate pro‑forma numbers:
- Combined market cap = (Shares post‑merger × post‑merger share price).
- Enterprise value = combined market cap + combined debt – combined cash.
- Pro‑forma net income = sum of the two companies’ net incomes (adjust for merger‑related items).
- Pro‑forma EBITDA = sum of the two EBITDA figures (again adjusting for any merger‑related charges).
- Combined market cap = (Shares post‑merger × post‑merger share price).
- Derive the multiples (P/E = market cap / net income; EV/EBITDA = EV / EBITDA).
- Benchmark using the historical weighted‑average multiples (Step 2.1) and the peer set (Step 2.2).
5. Bottom‑line answer to the original question
“What are the valuation multiples (e.g., P/E, EV/EBITDA) of the merged entity compared to its historical averages and peers?”
Based solely on the Business Wire announcement dated August 7 2025, the valuation multiples for the combined Monroe Capital‑Horizon Technology Finance entity are *not disclosed*. Consequently, we cannot provide a numeric comparison to historical averages or peer multiples at this time.
However, once the definitive merger filing and the first post‑merger financial statements are released, the methodology outlined above will let you compute the pro‑forma P/E, EV/EBITDA, and other ratios and place them in context against:
- The weighted historic averages of MRCC and HRZN, and
- The median multiples of comparable BDCs (typically P/E ≈ 8‑14×, EV/EBITDA ≈ 7‑12×, P/B ≈ 0.9‑1.5×).
Feel free to let me know when the S‑4 or the combined 10‑K becomes available, and I can walk you through the actual calculations with the real numbers.