MOIC (Multiple on Invested Capital)

Definition

Total cash returned over cash put in, ignoring how long it took.

Why It Matters

A $500k stake that pays back $1.5M is a 3.0x MOIC, and unlike IRR it ignores how long the money was out. It is the number the search-fund studies report beside IRR, and they do not agree: IESE's 2024 edition puts international funds at 2.0x, while Stanford's 2026 edition, with data through the end of 2025, reports 4.75x for the US and Canada. IRR alone can flatter a fast, small exit, so read the multiple and the hold length together. A 2.0x in three years and a 2.0x in ten years hand investors the same dollars at very different annual rates. Which one your backer is solving for is not a neutral choice. A fund manager answering to limited partners is usually judged on IRR, and an early sale flatters it, so pressure to sell can arrive before the multiple has finished growing.

In numbers: Investors put $2,000,000 into a deal and receive $5,000,000 when it sells: a 2.5x MOIC, whether the hold ran four years or eight.