Thursday, March 15, 2012

Building a Billion-Dollar Enterprise, 0

A couple of days ago, something that I was reading sparked the conversion of a vague desire into a clear, coherent thought.

The vague desire has been: to take Luminaria Productions public.

The coherent thought is: I want to take Luminaria Productions public on April 6, 2017, selling at least 20 million of 100 million shares issued, with a price of at least $10 a share after the opening pop.

That would make Luminaria worth $1 billion.

With a p/e ratio of 10, Luminaria would need earnings of $100 million to attain that valuation; with a p/e of 25, $40 million.

As I write this, Lionsgate is selling at a P/E of 52.7857. At that p/e, $19 million in earnings would make a billion-dollar company.

There's no saying what the median p/e ratios for media production companies will be in April of 2017. But if I assume that it's no higher than 50, and the Luminaria's p/e is no higher than the median, Luminaria will need earnings of $20 million (along with other factors) to be worth $1 billion.

More importantly, Luminaria will need both the structure and the plan to give investors confidence in its continued earnings.

I can't make $20 million today. What I can do today - or any day - is work on the structure and plan that can generate $20 million.

UPDATE: I added the "0" at the end of the title to indicate that this is a starting point. I created Luminaria years ago, but the pursuit of a $200 million IPO for a $1 billion company starts with the declaration that that is the goal.
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