What are the key terms and valuation multiples of the merger agreement with HRZN?

Key terms of the HRZN‑MRCC merger agreement

• Structure: Monroe Capital Corp. (MRCC) will merge into Horizon Technology Finance Corp. (HRZN). The transaction is a “reverse‑merger” in which HRZN remains the surviving public entity.
  
• Closing conditions: The merger is contingent on (i) receipt of the required shareholder approvals from both companies, (ii) satisfaction (or waiver) of a series of closing conditions outlined in the Merger Agreement, and (iii) completion of an asset‑sale to Monroe Capital Income Plus Corp. (MCIP) that will dispose of MRCC’s investment portfolio at “fair‑value” prior to the merger close.
  
• Timing: The definitive agreement was announced on August 7 2025 with an expected closing in the late‑Q3 2025 window, assuming all approvals and conditions are met.
  

Valuation multiples

The press release does not disclose the specific valuation multiples (e.g., EV/EBITDA, price‑to‑book, or price‑to‑earnings) attached to the transaction. The only quantitative reference is that the asset‑sale to MCIP will be executed at “fair‑value,” implying that the merger price will be set on a net‑asset‑value (NAV) basis rather than a premium‑based multiple. Until the definitive terms are filed with the SEC (e.g., a Form 8‑K or S‑4), market participants must treat the valuation as undisclosed and focus on the structural and conditional aspects of the deal.

Trading implications

1. Short‑to‑mid‑term positioning: With the merger still pending shareholder votes and the fair‑value asset sale, the market will likely price MRCC’s shares on a NAV‑discount to reflect the uncertainty. If the current market price is already below the fair‑value NAV, a short‑term bounce could occur once the merger is approved, offering a potential buy‑the‑dip opportunity. Conversely, any hint of a higher‑than‑fair‑value premium in the final filing would create upside pressure on both MRCC and HRZN.

2. Liquidity & volatility: The transaction creates a share‑conversion (MRCC shares into HRZN) that may compress the float of HRZN and increase short‑covering demand. Expect heightened volatility in HRZN’s price around the expected closing date, especially if the asset‑sale proceeds are material to the combined balance sheet.

3. Risk management: The primary risk is the shareholder‑approval hurdle. A failure to secure the required votes—particularly from MRCC’s BDC investors—could derail the merger, sending MRCC’s stock sharply lower. Maintain a tight stop (e.g., 5‑7 % below the current MRCC price) until the SEC filing or the shareholder‑vote date is confirmed.

In short, while the exact valuation multiples remain undisclosed, the merger’s structure and fair‑value asset‑sale suggest a NAV‑driven pricing model. Traders should monitor SEC filings for the final pricing terms, watch for shareholder‑vote outcomes, and position for a potential short‑term rebound in MRCC (or a spread‑play between MRCC and HRZN) once the merger clears.