Common performance measures in Private Equity
- Internal Rate of Return (IRR)
- Multiple on Invested Capital (MOIC)
Less common measures
- Distributed to Paid-In Capital (DPI)
- Public Market Equivalent (PME)
Example 1
Invest $100M, receive $200M in one year
- IRR = 100%, where $100M * (1+100%) = $200M
- MOIC = $200M/$100M = 2x
Example 2
Invest $100M, receive $200M in two years
- IRR = 41%, where $100M * (1+100%)^2 = $200M
- MOIC = $200M/$100M = 2x