# IRR (Internal Rate of Return)

The annualized return on cash flows, which compares unlike deals.

It is the yardstick the [search-fund](https://searchspheresource.com/glossary/search-fund) studies report in, and the two that matter are far apart. IESE's 2024 edition puts the aggregate for international funds at 18.1%, while Stanford's 2026 edition, with data through the end of 2025, reports 33.9% for the US and Canada. It is also the threshold a [distribution waterfall](https://searchspheresource.com/glossary/distribution-waterfall)'s later steps often key off. A fast small exit and a long large hold can hand back the same dollars at very different IRRs, so read it beside the multiple and the hold length.

In numbers: Turning a $500k equity check into $1.5M over five years is about a 25% IRR; the same 3x multiple stretched to ten years is only about 12%, because IRR charges for time.

Source: https://searchspheresource.com/glossary/irr
Not dated: A definition is editorial: what a term means, why it matters, and an example. None of it reads a source that can go stale, so there is no date to take and a stamped one would be the build time wearing a costume.

Site index for machines: https://searchspheresource.com/llms.txt