Multiple of Capital

Definition:

A measure of return on investment, calculated relative to your original investment. It is calculated as the total current value of your investment divided by the original investment value.

Sometimes also known as Multiple of Money, MOM or MOC.

Example:

The private equity firm generated a 4x Multiple of Capital on its investment in the company upon the IPO. Their investment is now worth $400 million vs. their original investment of $100 million.

More Information:

Many venture capital and private equity firms have an investment objective of generating returns based on multiples of capital. They are seeking to make investments that make a 5-10x MOM.