Multiple on invested capital, or MOIC, is total value returned — cash already distributed plus the current value of anything still held — divided by the capital originally invested; it tells an investor how many dollars came back for every dollar in, with no adjustment for how long that dollar was tied up.
MOIC and internal rate of return answer different questions, and a Canadian fund principal reviewing a deal needs both. MOIC is a pure multiple of money: a $10 million investment returned as $30 million is a 3.0x MOIC whether that took eighteen months or eight years. IRR is time-weighted — the same $30 million back in eighteen months produces a far higher annualised IRR than the same amount back in eight years, even though the MOIC is identical in both cases. The gap matters most on quick wins and slow burns: a deal that returns 1.4x in six months can post a spectacular IRR on a modest amount of actual wealth created, while a 4.0x MOIC realised over a decade can show a comparatively ordinary IRR despite creating far more dollars of value. Neither number alone tells the full story.
MOIC is quoted at both the deal level and the fund level in Canadian practice, and the distinction matters when a fund is structured to let LPs invest directly alongside it. Where a limited partner or family office co-invests in a single transaction rather than the blind pool, that co-investment is typically sold under the minimum-amount exemption in NI 45-106 s. 2.10 — available only to a purchaser that is not an individual, buying as principal, for at least $150,000 paid in cash, in a single issuer’s security. A co-investor evaluating that single position naturally tracks its own deal-level MOIC, separate from the blended MOIC the main fund reports across its whole portfolio.
A fund buys 100% of a portfolio company for $10 million in equity. Five years later it sells the company for $30 million net of transaction costs, having taken no interim distributions. MOIC is $30 million ÷ $10 million = 3.0x. A second, unrelated deal in the same fund returns $20 million on a $10 million investment after just one year: its MOIC is a lower 2.0x, but because the capital was returned so much faster, its annualised IRR is far higher than the first deal’s. Reporting MOIC next to IRR, rather than either number alone, is what lets an LP see both how much money a deal made and how efficiently it made it.
See also: Total value to paid-in capital · J-curve · Cutting the turnaround time on quarterly LP reports.
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