Glossary 3: Multiple on Invested Capital (MOIC)
Multiple on Invested Capital (“MOIC”) is a metric used to describe the value or performance of an investment relative to its initial cost, commonly used within private equity (PE). MOIC is among the most relevant metrics to be assessed while conducting fund due diligence. In fund investments, MOIC is expressed as a measure of the total value (i.e., both realized and unrealized) of all shares in the fund divided by the initial investment. Because MOIC does not produce time-weighted returns and therefore does not consider the timing of the cashflows related to the investment, MOIC is used together with IRR in assessing a PE investment. MOIC tells readers how the value of an investment has grown on an absolute basis, while an IRR tells how that investment has generated returns on an annualized basis.
