Glossary
Multiple on Invested Capital (MOIC)
Multiple on invested capital (MOIC) is the total value an investment returns, including realized proceeds and unrealized value, divided by the capital invested. A 2.0x MOIC means the investment returned or is worth twice the money put in. MOIC measures the size of the gain but ignores how long it took.
Formula
Example
A fund invests $20,000,000 in a company, receives $5,000,000 of dividends during the hold, and sells its stake for $45,000,000. MOIC = ($5,000,000 + $45,000,000) / $20,000,000 = 2.5x. Simplifying to a single entry and exit, a 2.5x over 3 years is roughly a 36% annual return, while the same 2.5x over 7 years is roughly 14% a year.
How it is used in underwriting
Private equity and venture investors use MOIC alongside IRR to judge deal and fund performance. IRR rewards speed, while MOIC shows how much money was actually made. Investment committees often require both a minimum IRR and a minimum MOIC, because a quick 1.3x can show a high IRR yet barely move a fund's results. At the deal level, underwriters build an exit value from projected EBITDA and an exit multiple, subtract net debt, and divide equity proceeds by equity invested to get MOIC across base, upside and downside cases.
Gross MOIC is measured before fees, expenses and carried interest; net MOIC is what limited partners actually receive, and the gap can be substantial. Unrealized MOIC depends on the sponsor's valuation marks, so it is less reliable than realized MOIC. MOIC and equity multiple are often used interchangeably, though some real estate sponsors define equity multiple on total distributions only. TVPI, total value to paid-in capital, is the fund-level equivalent. Lenders do not use MOIC, but they watch sponsor equity value because it sits beneath their loan and absorbs losses first.
Typical benchmarks
Buyout investors often target roughly 2.0x to 3.0x gross MOIC over a typical hold, while venture investors look for much higher multiples on individual winners to offset losses elsewhere in the portfolio.
Run the numbers: MOIC Calculator
Frequently asked questions
What is a good MOIC?
In private equity buyouts, a gross MOIC of 2.0x to 3.0x over a typical hold is often treated as a solid result. Venture capital seeks much larger multiples on winners. The right threshold depends on hold period and risk, since 2.0x over three years is far better than 2.0x over ten.
What is the difference between MOIC and IRR?
MOIC measures how many times capital was returned and ignores time. IRR is an annualized return that depends heavily on timing. An investment returning 2.0x in two years has a much higher IRR than one returning 2.0x in eight years, even though their MOICs are identical.
Is MOIC the same as TVPI?
They are closely related. MOIC is typically used at the deal level and measures value relative to capital invested in that deal. TVPI is a fund-level metric that divides distributions plus remaining value by all capital paid in, including fees and expenses, so it is usually lower than gross deal MOIC.
Related terms
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