MOIC

The ratio of current value plus distributions to invested capital – it shows how many times the capital has been multiplied.

In practice

In practice, the MOIC is reported for each private equity commitment alongside the IRR: the MOIC shows the absolute result, the IRR how quickly it was achieved. A distinction is made between the realised multiple, based on distributions only, and the total multiple including the current net asset value.

Distinctions and common mistakes

The MOIC ignores time: a multiple of 2.0 over three years is very different from the same multiple over twelve years. A common mistake is to present a high total multiple without saying how much of it rests on unrealised valuations.

Related terms

Internal rate of return

Money-weighted return that takes into account the size and timing of all cash flows – common for private equity and real estate.

Time-weighted return

A return measure that neutralises the effect of contributions and withdrawals and thus measures the performance of the asset management.

Mentioned in these guides

• TWR or IRR? Which return a family office measuresTime-weighted return (TWR) and internal rate of return (IRR) compared: what each measures, when to use which, a worked example and the meaning for reporting.
• Software for the single family officeSingle family office software: the whole family structure, consolidated wealth across all banks, documents with deadlines and compliance evidence in one system.
• Consolidated wealth overview for the single family officeConsolidated wealth in a single family office: look-through across companies and foundations, one reporting currency, performance and illiquid assets.
• Benchmarks for family wealthWhich benchmark suits family wealth: composite indices, inflation targets, peer comparisons – and how to measure asset managers fairly against them.
• Building a family office's reporting frameworkHow a family office builds its reporting: recipients, frequency, contents, data flow through to approval, controls and a template for the monthly report.
• The CIO in a family office: strategy, selection, oversightWhat the CIO in a family office is responsible for: investment strategy, selecting and monitoring managers, risk, reporting and the investment committee.
• The investment process in a family office: from idea to monitoringHow a family office structures investment decisions: pre-screening, due diligence, investment memo, decision, limits, monitoring and exit.