Case ID: 298071
Solution ID: 5090
Words: 1038
Price $ 75

NSK Software Technologies Ltd

Case Solution

Discusses the efforts of three Israeli software engineers' efforts to bring a network security software product to market. The firm needs an investment to complete programming and start marketing.

Excel Calculations

Project Value

Scenario A, Scenario B

EBIT(1-T)

T=35%

Capital Expenditure

FCF

Value of Project

 

Comparables

Scenario A, Scenario B

Sales

SG&A

Net Income

Net worth from sales ratio

from NW/Sales ratio

from NW/SG&A

from NW/Net Income

 

WACC

Borland Intl Inc, Corel Corp, Mircosoft, Sun Microsystems

Beta

Average Beta

Risk Premium

Risk Free rate

 

Cost of Equity

Questions Covered

1. What do Shwed, Matthias Nacht, and Kaplan bring Gil to NSK?

2. Are they true entrepreneurs?

3. What skills or abilities do they have?

4. Where did the idea for NSK come from?

5. What does this tell us about their probability of successfully developing the product? Is there market potential for their product? Can they deliver?

6. Who should Showed approach for financing? Is $125,000 enough? Why are they raising so little?

7. What should the terms of the deal be?

8. Conduct a DCF and simple comparables valuation (total firm value and that valued by a VC) using the data provided.