Executive Summary / Key Takeaways

• McKinley Acquisition Corporation (NASDAQ:MKLY) is a Special Purpose Acquisition Company (SPAC) poised to identify and merge with a high-growth private enterprise, leveraging its capital structure and sponsor expertise to unlock value for investors.
• The company successfully completed its Initial Public Offering (IPO) in August 2025, raising $172.5 million for its Trust Account, providing substantial capital for its intended business combination.
• While currently in its search phase with no operating revenues, MKLY's financial health is characterized by prudent management of formation and administrative expenses, though a working capital deficit prior to the IPO highlighted the critical need for a successful merger.
• MKLY operates in a competitive SPAC landscape, distinguishing itself through strategic flexibility and the potential for targeted acquisitions in emerging sectors, yet faces challenges in execution speed and established networks compared to more seasoned rivals.
• The investment thesis hinges on management's ability to identify a compelling target business within the stipulated timeframe, effectively navigating market volatility and geopolitical risks to deliver a transformative merger.

Introduction: The Blank Check Opportunity

McKinley Acquisition Corporation (NASDAQ:MKLY) stands as a blank check company, a Special Purpose Acquisition Company (SPAC) incorporated in the Cayman Islands with the singular objective of effecting a merger, amalgamation, share exchange, asset acquisition, share purchase, reorganization, or similar business combination with one or more businesses. As of its latest filing, MKLY has not yet commenced operations or identified a specific target, positioning it as a pure-play vehicle for investors seeking exposure to a future, yet-to-be-determined, growth enterprise. This strategic approach places MKLY within a dynamic industry landscape, where its success is intrinsically linked to its ability to identify and execute a compelling business combination amidst evolving market conditions.

The broader market environment presents both opportunities and challenges for SPACs like MKLY. Geopolitical instability, stemming from conflicts such as the Russia-Ukraine and Israel-Hamas situations, continues to introduce volatility across global markets, impacting commodity prices, capital markets, and supply chains. Furthermore, shifts in U.S. trade policy, including the imposition of tariffs, have created an uncertain international trade climate. These macro trends underscore the importance of strategic adaptability and robust due diligence in the search for a suitable target. Concurrently, emerging sectors, particularly those driven by advancements in artificial intelligence (AI) and the resulting surge in data center power demands, present fertile ground for potential acquisitions, offering significant growth opportunities for a well-positioned SPAC.

McKinley's Strategic Foundation and the SPAC Advantage

McKinley Acquisition Corporation was established on March 27, 2025, with its initial activities focused entirely on formation and preparing for its Initial Public Offering. This foundational period included securing initial funding, notably a $25,000 payment from its sponsor, McKinley Partners LLC, in exchange for 6.54 million Class B ordinary shares, and loans totaling up to $185,000 from the sponsor to cover IPO-related expenses. These early financial maneuvers were critical in establishing the company's capital structure and operational runway for its initial phase.

The core "technology" and differentiator for MKLY, as a SPAC, lies in its very structure and the expertise of its sponsor. The SPAC model offers a streamlined path to public markets for private companies, potentially providing faster access to capital and greater certainty of execution compared to traditional IPOs. This structural advantage can be particularly appealing to target businesses seeking efficient capital formation and a public listing. McKinley Partners LLC, as the sponsor, brings its network and experience to the fore, acting as the primary engine for identifying, evaluating, and negotiating with potential target businesses. This sponsor-led deal sourcing and structuring capability is a key asset, aiming to translate into a competitive moat by securing attractive acquisition opportunities. For investors, this translates into the potential for efficient value creation, as the SPAC structure is designed to accelerate a private company's growth trajectory by providing immediate access to public market capital and strategic guidance.

Financial Prudence in the Search Phase

As a pre-operational blank check company, MKLY's financial performance is currently defined by its capital-raising activities and the management of its formation and administrative expenses. For the three months ended June 30, 2025, and for the period from inception (March 27, 2025) through June 30, 2025, the company reported a net loss of $54,820 and $63,421, respectively, primarily driven by formation, general, and administrative expenses. As of June 30, 2025, MKLY had no cash and a working capital deficit of $98,122, a condition that raised substantial doubt about its ability to continue as a going concern. Management's explicit plan to address this uncertainty is the successful completion of an initial Business Combination.

A significant financial milestone occurred post-quarter-end. On August 13, 2025, MKLY successfully completed its IPO, selling 15.00 million units at $10 per unit, generating gross proceeds of $150.00 million. Concurrently, 465,000 private placement units were sold for $4.65 million. Total transaction costs amounted to $7.26 million. Critically, $150.00 million from the IPO proceeds was deposited into a Trust Account. Further bolstering its capital, on August 15, 2025, Clear Street exercised its over-allotment option for an additional 2.25 million units, adding $22.50 million to the Trust Account, bringing the total to $172.5 million. These funds are intended to be used for the initial Business Combination, with interest earned on the Trust Account expected to cover annual income tax obligations. Funds held outside the Trust Account, estimated to be approximately $2.4 million (including $1.00 million for legal/accounting/due diligence, $465,000 for SEC reporting, $180,000 for infrastructure, $175,000 for D&O insurance, and $580,000 for working capital and reserves), will be utilized for the search and due diligence process.

Competitive Arena: Navigating a Crowded Field

McKinley Acquisition Corporation operates within a highly competitive SPAC market, vying with numerous other blank check companies and traditional acquisition vehicles for attractive merger targets. Key direct competitors include Churchill Capital Corp VII (CCVI), Social Capital Hedosophia Holdings Corp. VI (IPOF), and Pershing Square Tontine Holdings (PSTH). While MKLY's SPAC structure offers inherent advantages like flexibility in targeting diverse sectors, it faces challenges against these more established rivals.

Compared to Churchill Capital Corp VII, MKLY shares a similar capital-raising structure but may lag in terms of sponsor experience and an established deal pipeline. CCVI's track record and strong backing often provide an edge in attracting premium deal opportunities. Similarly, against Social Capital Hedosophia Holdings Corp. VI, MKLY's generalized acquisition approach contrasts with IPOF's strong brand and network in technology and growth-oriented companies, potentially giving IPOF faster innovation cycles in shared tech markets. When pitted against Pershing Square Tontine Holdings, MKLY's potentially more cost-effective acquisition structure is offset by PSTH's significantly stronger financial backing and negotiation prowess, which can be a material advantage in large-scale deals. MKLY's competitive strengths lie in its adaptability to emerging sectors, such as those driven by AI-powered data centers and the associated energy infrastructure demands, where its flexible approach could allow for targeted entries. However, it generally lags in overall financial health, execution speed, and market share capture compared to these more resourced and experienced competitors. Indirect competition also comes from traditional IPOs and private equity firms, which can divert potential merger targets, particularly if they offer simpler or lower-cost routes to capital.

Outlook and Risks: The Path to a Business Combination

McKinley Acquisition Corporation's outlook is singularly focused on the successful identification and consummation of its initial Business Combination within its 18-month completion window. Management anticipates increased expenses post-IPO due to public company compliance and due diligence activities, which will be funded by the capital held outside the Trust Account. The interest income generated from the $172.5 million held in the Trust Account is expected to be sufficient to cover the company's annual income tax obligations. MKLY intends to target businesses with enterprise values greater than the net proceeds from its IPO and private placement, implying a potential need for additional financing to complete such transactions. There are no limitations on the company's ability to raise further funds through equity, equity-linked securities, or debt in connection with a business combination.

However, the path to a successful merger is fraught with risks. The primary risk remains the inability to successfully effect a Business Combination within the Completion Window, which would force the company to liquidate the Trust Account, rendering rights worthless and potentially resulting in a loss for public shareholders. The proceeds in the Trust Account could also be subject to creditor claims, which may have priority over public shareholders. Furthermore, the issuance of additional shares in connection with a business combination could significantly dilute existing equity interests. The company's reliance on the sponsor for potential working capital loans, coupled with the uncertainty of the sponsor's ability to satisfy indemnity obligations, presents additional financial vulnerabilities. Geopolitical instability and trade tensions, as highlighted by recent conflicts and tariffs, could also adversely affect the search for and consummation of a target business, impacting market conditions and investor sentiment.

Conclusion

McKinley Acquisition Corporation (NASDAQ:MKLY) represents an investment in the potential for a transformative business combination, driven by the strategic flexibility of its SPAC structure and the expertise of its sponsor. With $172.5 million secured in its Trust Account following its successful IPO, the company possesses the capital foundation necessary to pursue its objective. While currently in a pre-operational phase, MKLY's management is focused on prudent expense management and the diligent search for a suitable target.

The company's competitive standing, characterized by its adaptability in a market with established SPAC players, positions it to potentially capitalize on emerging industry trends, such as the burgeoning demand for AI-driven data center infrastructure. However, investors must weigh these opportunities against the inherent risks of a blank check company, particularly the uncertainty of completing a business combination within the stipulated timeframe and the potential for dilution or market volatility. The ultimate success of MKLY will depend on its ability to leverage its strategic advantages, navigate a complex competitive landscape, and execute a merger that delivers substantial long-term value to its shareholders.