Multiple on Invested Capital (MOIC)

Learn how to calculate MOIC and how it's used to measure the investment performance of private equity funds.

5 minute read
MOIC Calculation

What is Multiple on Invested Capital (MOIC)?

Multiple on Invested Capital (MOIC) is a ratio or “multiple” of money received (or will receive) relative to the investment amount. Simply put, if a fund invested $1 and received $3 from the investment, the fund has a MOIC of 3x.

MOIC is commonly used in private equity to evaluate the performance of an investment or a portfolio of investments. These investments include real estate purchases, company buyouts, or any other asset or security that can be bought and sold for a profit.

Common Synonyms for MOIC:

  • Equity Multiple
  • Multiple-on-Money (MoM)
  • Cash-on-Cash Return (Coc)

MOIC Formula and Calculation (Single Asset)

MOIC Formula Single Investment

MOIC = Total Cash Inflow / Total Investment Amount

When evaluating an investment in a single asset, the MOIC is calculated by dividing the total investment cash inflows by the total investment amount. In other words, the metric is simply looking at how much money was made relative to how much money was invested.

Formula Inputs

  • Total Cash Inflow: Incoming cash from periodic payments (Ex. dividends, coupon payments, rental income) and from the asset sale (Ex. sold real estate, company, other asset).
  • Total Investment Amount: Cash amount used to purchase an asset.

Example Private Equity MOIC Calculations (Single Asset)

Let’s take a look at how the MOIC calculation can be applied to a private equity firm evaluating the investment performance of its asset.

Scenario 1: BrightStone private equity group invests $50 million to purchase an equity stake in a $100 million office building in San Francisco (the other $50 million was funded by a loan). Over the course of three years, BrightStone collected $15 million in rental income. At the end of the third year, the private equity company sells the property for $150 million and collects $100 million after paying back its $50 million loan.

  • Total Initial Investment = $50 million equity investment
  • Total Cash Inflow = $15 million rental income + $100 million sale proceeds
  • MOIC = $115 million / $50 million = 2.3x

In this scenario, BrightStone made $2.30 for every $1 it invested in the project which is equivalent to a MOIC of 2.3x.

Scenario 2: HappyComp private equity group spent $30 million in equity and borrowed $40 million to purchase a $70 million pool cleaning company. After 5 years, HappyComp sells its stake in the pool cleaning company for $90 million and collects $50 million after paying off its $40 million loan.

  • Total Initial Investment = $30 million equity investment
  • Total Cash Inflow = $50 million sale proceeds
  • MOIC = $50 million / $30 million = 1.67x

In this scenario, HappyComp made $1.67 for every $1 it invested in the project which results in a MOIC of 1.67x.

MOIC Formula and Calculation (Portfolio)

MOIC Formula Multiple Investments

MOIC = (Realized Value + Unrealized Value) / Total Investment Amount

When evaluating an investment in a portfolio of assets, the MOIC is calculated by dividing the sum of the realized and unrealized gains by the total investment amount. In other words, you’ll add together the cash inflows from asset sales and the potential cash inflows from unsold assets and divide the sum by the total initial investment.

Formula Inputs

  • Realized Value = Cash inflow from sold assets and exited investments
  • Unrealized Value = Market value of unsold assets (how much you would receive today if you sold these assets)
  • Total Investment Amount = Cash spent on acquiring assets

Example Private Equity MOIC Calculation (Portfolio)

Scenario 1: SilverMountain private equity fund has a mixed portfolio of commercial real estate investments spread across the country. The fund has collected $50 million in rental income so far and has collected $210 million from selling some of the properties in the portfolio. The other properties are currently valued at $500 million after accounting for loan paybacks on the properties. The private equity fund used $200 million to purchase all of its properties.

  • Realized Value = $50 million + $210 million = $260 million
  • Unrealized Value = $500 million
  • MOIC = ($260 million + $500 million) / $200 million = 3.8x

In this scenario, the portfolio is expected to return $3.80 for every $1 invested which results in an MOIC of 3.8x.

High vs Low MOIC

  • High MOIC: Investors look for a high MOIC as that would result in a higher return on investment. A good MOIC might sit between the range of 2x and 3x, but standards will vary by asset and industry standards.
  • Low MOIC: A low MOIC result is undesirable as it results in a lower return on investment. A MOIC below 1x means the investment generated less income relative to the initial spend amount.
  • A 1x MOIC means the investor received $1 for every $1 spent which results in a breakeven with no gains or losses.

MOIC vs IRR: The Time Value of Money

In addition to MOIC, the internal rate of return (IRR) is also commonly used to evaluate the performance of an investment.

MOIC operates on an absolute time basis, which means the metric ignores any effects of time on the value of the investment. In other words, if your investment produces $100 million in a year or in 10 years, your MOIC would be the same.

Alternatively, IRR incorporates the time value of money to evaluate the performance of an investment on an annualized basis. In other words, IRR will value cash flow coming in sooner more than cash flow coming in later.

Example IRR vs MOIC

We can see the difference between IRR and MOIC by referencing the two investment examples below:

MOIC vs IRR Example

Both Investment A and Investment B have the same MOIC because the total cash inflows ($1,600) and total cash outflows ($1,000) are the same.

However, the IRR for Investment A is higher than Investment B because the cash inflows are being received sooner in years 1 and 2 in comparison to the later cash inflows for Investment B in years 3 and 4.


Total Value to Paid In (TVPI) is a metric calculated very similarly to MOIC except it uses an investor’s funding contributions (capital paid into the fund) in the denominator for the calculation as opposed to the actual invested amount.

This makes TVPI more relevant to an investor evaluating return on paid-in capital and MOIC more relevant to a company evaluating investment project performance.

Example MOIC vs TVPI

Scenario 1: StoneTree private equity collects a $1 million investment from Michael to start its first real estate fund. The fund then purchases $750,000 worth of investments and later sells those investments for $2 million.

  • MOIC = $2 million / $750,000 = 2.67x
  • TVPI = $2 million / $1 million = 2x

Here, the difference lies in the denominator where TVPI uses the paid-in capital amount of $1 million (regardless of whether or not the fund invests the entire balance). MOIC on the other hand, uses the exact invested amount of $750,000. This makes TVPI more applicable to the investor (Michael) and MOIC more applicable to the actual project.

Net MOIC and Gross MOIC

MOIC is usually calculated as Gross MOIC, but can sometimes be calculated as Net MOIC. 

Here are the key differences:

  • Net MOIC: Includes deducted fees from investments (Ex. expenses from limited partners, carried interest, etc.).
  • Gross MOIC: Excludes fees in the investment calculation.

Key Summary Recap

  • Definition: MOIC represents a ratio of the money generated by a project relative to the money invested into the project.
  • Formula: MOIC = Total Cash Inflow / Total Investment Amount.
  • Application: MOIC is often used within private equity to measure the dollar returns of an investment project or a portfolio of investment projects.

Additional Resources

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Michael Quach
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