Are there any alternative merger or acquisition options that MRCC could pursue if the current deal falls through?

Alternative M&A pathways for MRDC if the Horizon deal collapses

If the Horizon Technology Finance merger is blocked or abandoned, Monroe Capital Corp. (MRCC) still has a few realistic routes to create value and keep the stock‑price from languishing at the deep‑discount levels it’s been trading (well below the $10‑$12 range it hovered at before the deal‑announcement).

1. Strategic “best‑fit” buyer in the specialty‑finance niche – MRCC’s core franchise—asset‑backed and structured‑finance lending—appeals to mid‑market banks, private‑equity credit funds, and larger business‑development companies that are looking to scale their balance‑sheet without building a platform from scratch. A clean‑cash acquisition at a 10‑15 % premium to the current market (≈ $7.00‑$7.50) would be a credible fallback and could be executed quickly, because the target’s balance sheet is relatively simple and the regulatory approvals are limited to standard FINRA and OCC filings.

2. Partial asset‑sale or “strip‑sale” of non‑core loan portfolios – Monroe could monetize a slice of its loan book (e.g., consumer‑installment or equipment‑finance assets) to a specialty‑finance SP‑A or a large CLO manager. This would raise ~US$30‑$45 million of liquidity, tighten the capital ratio, and give the company a runway to pursue a “stand‑alone” growth plan or to re‑enter merger talks with a more attractive partner. The market typically rewards such clean‑up‑transactions with a modest price bump (3‑5 %) as the balance‑sheet risk profile improves.

3. Alternative capital‑raising structures – a SPAC or a PIPE – Given the current “fair‑to‑shareholders” scrutiny, a transparent, cash‑‑for‑stock PIPE (private‑investment in public‑equity) at a price modestly above the prevailing market (≈ $7.20‑$7.40) could both fund a strategic expansion (e.g., adding a fintech‑origination platform) and signal that management still has growth capital. A SPAC merger, while more complex, would let Monroe tap a broader valuation ceiling (potentially $10‑$12) if the sponsor brings a complementary technology stack.

Trading implications

Technical: MRCC is in a down‑trend on the daily chart (below the 50‑day SMA, making lower‑highs). If any of the above alternatives materialises, expect a short‑cover rally that could break the $7.00‑$7.20 resistance zone and test the 20‑day SMA (~$7.50). Conversely, a prolonged stalemate will keep the stock in the 5‑month downtrend, inviting further downside to the $6.00 support level.

Fundamentals: The company’s cash‑flow coverage ratio is already thin; any liquidity‑boosting transaction will be viewed positively by the credit‑risk community and could narrow the bid‑ask spread.

Actionable: Keep a tight stop at $6.80 if you’re long on the breakout scenario; consider a modest +10 % position‑sizing on a pull‑back to $6.50‑$6.70 with a target of $7.30‑$7.50 if news of a strategic asset sale or PIPE surfaces. If the merger is definitively ruled out and no alternative materialises, a short‑position with a target of $5.80 (next technical low) may be justified.