Glossary
Returns and fees
What is multiple of money?
Total cash out divided by cash in.
The honest counterweight to IRR: it asks how much you actually made rather than how fast. The two disagree constantly, and which one gets quoted tells you who is talking.
A worked example
Put in $100m, get $250m back and the multiple of money (MoM or MOIC) is 2.5x, whatever the timing. That's why it's quoted next to IRR: 2.5x over four years is about 26% a year, over eight years about 12%.
Where it catches you in the game
- Long holds that keep earning income score well here even when IRR looks unremarkable.
It comes up most on the private equity desk, the buy-side analyst desk and the venture capital desk.
Related terms
Learn it by using it
Definitions stick once they've cost you money. Take a seat, make three calls a year and watch what multiple of money does to your returns.