I'm going to work for a company that is privately held, but which
plans to go public with an IPO in the next five years.  It is a
financial services / mortgage business and currently operates in about
30 states.  Last year, an outside consulting firm valued the company
around $1.00 a share.
   
The company is offering a bonus plan where it is offering one share of
stock for every $4 of commission earned.  So I could conceivably
receive 25,000 stock options (exercisable in three years) over the
next year if my income reaches $100,000.
     
According to their five-year plan, they believe the stock will
eventually be valued around $50 per share (based on exponential
company growth and sales, etc.).  Hypothetically speaking, this would
mean my 25,000 shares would be worth $1,250,000.  Obviously, this
seems too good to be true.  So I am wondering how likely or realistic
such a scenario would actually be.
 
I'm wondering how likely it would be for ANY 5-6 year old private
company to be valued at $50 per share, and what the expectation of
change (for better or worse) would be if such a company went public. 
Would the 25,000 shares still be valued at $50 per share at the
initial public offering, or what would mostly likely happen to the
stock value, based on the stock performance of similar companies?  (I
realize this is a difficult - if not impossible - question to answer,
but even a rough idea from someone who "knows the market" would be
helpful.)
       
Though I don't really follow the stock market, I've seen IPO stocks
begin trading at $10-$15 a share (far from the $50 this company is
supposedly anticipating).  Then, of course, some stocks go much higher
(even overnight), and then some end up trading at $2 a share.  I know
Google did an unusual auction-based IPO starting at $85 a share, but
since that's not the norm, what would be even remotely realistic to
expect?
  
Again, they are supposedly anticipating that the stock will be valued
around $50 per share BEFORE the company goes public (based on a
projected company valuation).  So I'd like to know:  1.) If this is
EVEN REMOTELY REALISTIC,  and   2.) If I could potentially expect my
shares to actually be CASH-ABLE for 50 times what I paid?
   
Please explain and elaborate as much as possible.  I appreciate all feedback.
   
My last consideration regarding this, is what possible tax
ramifications could occur from receiving these stock options - whether
it goes as expected, or it fails and the options are never exercised?

They seem to speculate just a tad, don't they?

Five years is a long time.  The company's continued success may be
closely tied to our exceptionally low interest rates of the moment and
the resulting mortgage boom.  There's no way to know if the boom will
end soon or not.  There are many people who have entered the mortgage
market in the past 5 years who do not realize that it is a cyclical
business.  If and when rates go up, refinances dry up right away.  The
mortgage businesses that stay afloat in such a climate would have
diversified their income sources - new housing loans, relationships
with Realtors, commercial real estate, and whatever else.

Also, and I cannot stress this enough, the value of your shares is the
amount someone else is willing to pay for them.  Your accountants can
rave on and on about book value, but it means nothing until the shares
trade in an open market with a real bid and offer.

Regardless, it appears that you are doing well for yourself. 
Congratulations, and good luck with the new job.

You seem to be asking questions to which you already know the answer.
?What if it fails and the options are never exercised?? This is the
case with any volatile high-return stock. There?s a reason that the
return will be huge ? IF there is one, of course. I would argue that
you should indeed take the options under either of two conditions:

1)	You believe in the long-term growth of the company, 
Or
2)	You know someone willing to buy your options before they are exercised.

Between the two small companies I have worked for, and my
entrepreneurial friends, I am often offered an opportunity for
investment like the one you describe. One of my friends has a
newsletter that is constantly offering these quick-return huge-profit
stocks (see www.stock-investing-guru.com) . I have yet to see,
however, any of these companies go public. Do not confuse ?potential
growth? with ?actual value.? This applies to both the options and the
company itself. If you can confirm that you are doing so under one of
the two conditions I mentioned above, then great, do so. But remember
that in doing so you are still placing a very large wager.