Sign inWhat is MOIC in private equity?
MOIC is total value returned divided by equity invested. It ignores timing completely, which is why it is always read next to IRR.
MOIC = total value realised and unrealised / equity invested
How practitioners use it
Multiple on invested capital answers a blunt question: for every dollar of equity put in, how many dollars came back. It is the simplest way to compare two deals without worrying about the calendar.
Because it is time blind, MOIC is the honest counterweight to IRR. A fund can post an attractive IRR on a fast, small win while a slower deal with a 3.0x MOIC creates far more absolute value.
In interviews you are expected to quote both, then say which one matters for the question being asked.
Worked example with round numbers
01
Entry equity of 500 and exit equity value of 1,250 gives a 2.5x MOIC.
02
That holds whether the exit happens in year three or year seven.
03
Over five years, a 2.5x MOIC converts to roughly a 20% IRR.
Where people get it wrong
- Mixing gross MOIC at the deal level with net MOIC to limited partners.
- Forgetting to subtract remaining net debt before computing exit equity value.
- Ignoring follow-on equity injections, which raise the denominator.
Learn it by using it
Definitions stick once you have run the numbers yourself. The desk below is free and needs no signup.
Open the MOIC calculator