PEINVEST
The annualized rate of return that equates the present value of all cash inflows with the present value of all cash outflows in an investment. IRR is the most widely used return metric in PE and accounts for the timing and magnitude of cash flows.
A return metric that measures the total value generated relative to the amount of capital invested, expressed as a multiple. A 2.5x MOIC means the investment returned 2.5 times the original capital invested. Unlike IRR, MOIC does not account for the time value of money.
The most complete return metric in PE, measuring the total value of a fund (distributions plus remaining NAV) relative to total capital contributed. TVPI equals DPI plus RVPI, capturing both realized and unrealized returns in a single measure.
A performance metric that measures the cumulative distributions returned to investors relative to the total capital they have contributed to the fund. A DPI of 1.0x means LPs have received back their entire investment; above 1.0x indicates profit has been distributed.
The characteristic pattern of PE fund returns over time, where early years show negative returns due to management fees, fund expenses, and unrealized losses on new investments, before inflecting upward as portfolio companies mature and are exited. The shape of cumulative returns resembles the letter J.