Typically we calculate MOIC as exit equity price divided by entry equity price. But what if you're paying yourself dividends with extra cash flow generated by the company, or you do a dividend recap, etc.? Do you add these dividend amounts to the exit equity price when calculating MOIC?
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Yes. MOIC looks at absolute dollars returned, regardless of timing of those dollars (why we also look at IRR in conjunction with MOIC). MOIC is simply, over the life of the investment, how much cash is returned for every dollar of cash invested
White Collar nailed it.
If you want more detail:
http://www.macabacus.com/venture-capital/returns
So those IRR/MOIC tables only give you an accurate IRR if all the cash flows come at the end (from selling the company)?
Example: http://2.bp.blogspot.com/_jssZZMvgp5M/RncJXJqIHuI/AAAAAAAAANU/jYB5lsVEf…
Is there any way to quickly calculate IRR in your head if you have cash flows distributed at various intervals?
No. Look at the model and how it is setup. Dividends are in there. They count towards MOIC as white collar stated.
I don't believe that's correct. Look at the following cash flow streams:
-100, 0, 0, 0, 0, 200 = 2x MOIC; 14.9% IRR -100, 10, 10, 10, 10, 160 = 2x MOIC; 17.1% IRR
The table I posted above is only accurate in the case where you have all the cash flows coming in at the end. If you have cash flows over the course of the investment, that increases IRR (due to present value of money). So my original question stands: is there a simple way to quickly calculate IRR in your head if you have cash flows distributed at various intervals?
no
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