What is MOIC?
MOIC, or multiple on invested capital, is the total value an investment returns or is still worth, divided by the amount invested. A MOIC of 2.5x means each dollar invested became $2.50. It ignores time, so investors read it alongside IRR. In a survey of PE investors, the median target MOIC was 2.5 times the investment.
Why it matters to a revenue leader
MOIC tells a sponsor how many dollars come back for each dollar put in. Growth that compounds across the hold drives it. A delayed exit can still produce a good MOIC while hurting IRR, so sponsors watch both. The revenue plan is usually a large share of what gets a deal to its target multiple.
How to calculate it
MOIC = (cash returned + current value of remaining holdings) ÷ capital invested.
Common mistake: comparing MOICs across deals of different lengths, since 2x over three years is a far better result than 2x over eight.
Example
Fictitious numbersA sponsor invests $80M of equity in a security systems integrator and sells its stake six years later for $200M. MOIC is 2.5x. The same $200M received after four years would give the same MOIC and a much higher IRR.
"What MOIC does our sponsor need from this deal, and what revenue growth does that require from sales?"