MOIC (Multiple on Invested Capital)

Allocator relevance: A simple scale metric that complements IRR—useful for understanding magnitude of outcome without timing distortion.

Expanded Definition

MOIC tells you “how many times money was made” but not how long it took. A 2.0x over 3 years and a 2.0x over 10 years are very different, which is why MOIC is typically used alongside IRR. In private markets, MOIC depends on valuations for unrealized positions, so valuation policy and mark discipline matter.

Allocators rely on MOIC for benchmarking across strategies and vintages, especially when cash flow timing makes IRR noisy.

How It Works in Practice

Managers report gross and net MOIC, often alongside TVPI and DPI. Allocators check consistency across funds and analyze whether unrealized value is credible and supported by comparable outcomes.

Decision Authority and Governance

Governance requires consistent valuation methodology and reporting transparency. LPAC oversight and audits reduce the risk of inflated unrealized multiples.

Common Misconceptions

• MOIC is less “gameable” than IRR (it can still be inflated via marks).
• MOIC compares cleanly across strategies.
• MOIC alone indicates success (realization matters).

Key Takeaways

• MOIC measures magnitude, not speed.
• Pair with IRR, DPI, and TVPI.
• Marks and valuation policy drive reliability.