MOIC to IRR: Conversion Formula and Five-Year Lookup Table

The single-exit conversion

If an investment has no interim cash flows, the return is the annual compound growth rate of invested capital. Holding period is in years. For actual cash flows on irregular dates, calculate a dated IRR rather than rounding every date to an integer year.

IRR = MOIC^(1 / holding years) − 1
MOIC = (1 + IRR)^holding years

Worked example: 2.5x over five years

An investor contributes $10m and receives $25m five years later, with nothing in between. MOIC is 2.5x and IRR is 2.5^(1/5) − 1 = approximately 20.11%. The same 2.5x over three years produces approximately 35.72%, showing why timing matters.

Five-year lookup table

For one initial outflow and one receipt exactly five years later:

• 1.0x MOIC → 0.00% IRR
• 1.5x MOIC → 8.45% IRR
• 2.0x MOIC → 14.87% IRR
• 2.5x MOIC → 20.11% IRR
• 3.0x MOIC → 24.57% IRR
• 4.0x MOIC → 31.95% IRR

Why dividends change the answer

An initial $10m investment, a $5m dividend at year one and $15m exit proceeds at year five have 2.0x MOIC. Their IRR is approximately 20.69%, higher than the 14.87% from receiving the whole $20m at year five. Discount each receipt at its actual timing; do not apply the single-exit shortcut to total proceeds.

Excel and model interpretation

Use IRR for evenly spaced cash flows and XIRR with actual dates for irregular flows. Include fees, follow-on investments and the investor’s share of proceeds. Cash-flow series with multiple sign changes can have multiple IRRs or no economically useful IRR. MOIC remains a complementary measure, not an annualized return.

diophos returns

diophos models Exit Multiple investor returns using the selected deal terms and timing conventions. Read IRR alongside MOIC, equity participation, interim distributions and debt balances. The lookup table is illustrative and assumes no interim cash flows or costs beyond the initial investment.