Multiple on Invested Capital

MOIC answers a simple question: for every dollar put in, how many dollars came back? A MOIC of 2.0x means an investment returned twice the original capital. Families and fund managers use it as a quick snapshot of raw magnitude. Did this bet double, triple, or lose money, before layering in more nuanced analysis. It is one of the most common metrics in private equity and direct investing.

The critical limitation is that MOIC ignores time entirely. A 3.0x return over three years and a 3.0x return over twelve years look identical by this measure, even though the annualized performance is radically different. That is why families and their advisors typically pair MOIC with a time-weighted metric such as Internal Rate of Return (IRR) to get a complete picture. Neither number alone tells the whole story.

Consider a hypothetical: a family office invested an illustrative $5 million in a private company and ultimately received $12 million back, producing a 2.4x MOIC. That figure says nothing about whether it took two years or ten. A related metric, TVPI, extends this logic to fund-level accounting by combining cash already distributed with the estimated value still held.

A common confusion is treating MOIC and DPI as interchangeable. MOIC can include paper gains. Value that exists on a spreadsheet but has not yet been paid out. DPI counts only cash actually received, making it a stricter, more conservative measure of realized success.