Multiple on Invested Capital (MOIC)

MOIC answers “how many times the money?”

MOIC is a capital multiple. In its simplest form:

MOIC = total value ÷ invested capital

A 2.0x MOIC means the measured value is twice the invested capital. A 0.8x MOIC means the measured value is only 80% of the original capital.

In private markets, the numerator can include realized proceeds, unrealized value, or both, depending on the stated methodology.

Example

Assume a fund invests $10 million in a company.

Several years later:

• $6 million has been realized through distributions or partial sales.
• The remaining ownership is valued at $14 million.

Total value is $20 million.

MOIC = $20 million ÷ $10 million = 2.0x

If the remaining asset is later sold for less than its carrying value, the final MOIC will fall. Interim MOIC is therefore partly dependent on valuation when unrealized assets remain.

MOIC ignores time

This is the key limitation.

A 2.0x return earned in two years is economically different from 2.0x earned in ten years, but MOIC itself does not distinguish between them.

IRR does.

That is why professional private-market reporting often presents a money multiple and IRR together. The multiple describes magnitude; IRR incorporates timing.

Gross MOIC and net MOIC

Just as with IRR, MOIC can be measured before or after fund-level investor economics.

Public disclosures filed with the SEC show managers distinguishing gross and net money multiples. TPG, for example, explains that gross and net fund metrics differ based on treatment of management fees, fund expenses, performance allocations and investor cash flows.^[1]

A reader should therefore identify:

• whether the metric is deal-level or fund-level
• whether fees and expenses are deducted
• whether carried interest is reflected
• whether unrealized value is included
• which capital denominator is used

MOIC and TVPI are similar, but context matters

At the fund level, TVPI also measures total value relative to paid-in capital.

MOIC is often used more flexibly at the investment or deal level, while TVPI has a more standardized fund-reporting meaning tied to LP contributions.

The two numbers can be identical under some conventions and different under others.

Calling both “2.0x” does not prove they used the same numerator or denominator.

MOIC does not tell how much cash has come back

A fund can report a 2.0x total-value multiple while most of that value remains unrealized.

For example:

• Paid/invested capital: $100 million
• Cash distributed: $20 million
• Remaining reported value: $180 million

Total value is $200 million, producing a 2.0x total-value multiple.

But only 0.2x has actually been distributed.

DPI exposes that difference.

Common mistakes

“2.0x MOIC means a 100% annual return.”

No. MOIC does not annualize performance.

“MOIC tells how quickly capital was returned.”

No. It contains no timing dimension by itself.

“MOIC is always net to the LP.”

No. It can be gross or net depending on the presentation.

“A high unrealized MOIC is equivalent to cash proceeds.”

No. Remaining private-company valuations can change before exit.

MOIC is easy to understand and hard to interpret correctly without the calculation convention. The most useful comparison pairs the multiple with IRR, separates realized from unrealized value, and confirms whether the figure is gross or net.