Southwest Ventures: Valuation Using Multiples Southwest Ventures is an entrepreneurial firm that manufactures RFID chips for supermarkets. You have been hired by the CEO of Southwest Ventures to determine if he should take an offer of investment of $0.5million from a VC investor in return for a 35% equity stake. Your first task is to value the company. You have already drawn the pro forma financial statements for the company (Exhibit 1). Since this is a new company you decide to look at the RFID manufacturing industry and find comparable companies. After extensive research you shortlist 3 companies: 1) North Ventures 2) West Ventures 3) East Ventures You compile salient data about financials as shown in the Exhibit 1. Southwest Ventures Income statement is projected for next year and is considered as representative for current exercise. Competitor' s financials are the latest available. You can assume that next year' s pro forma income statement of Southwest is representative. Exhibit 1: Part A) Value Southwest Ventures using EV/E (enterprise value/earnings) and EV/Sales multiples. Part B) Based only on your valuation model, will you recommend to accept or reject the VC offer? Part C) What other considerations apart from valuation model can influence your recommendation