What Is Equity Multiple?
Equity multiple measures total cash an investor receives back over the life of an investment relative to what they put in, expressed as a multiple rather than an annualized rate like IRR.
Formula
Equity Multiple = Total Cash Distributions ÷ Total Equity Invested
Example
An investor who puts in $100,000 and receives $180,000 in total distributions over the hold has an equity multiple of 1.8x.
Why It Matters
Equity multiple and IRR tell different stories: a 1.8x multiple over 3 years reflects a much higher IRR than the same 1.8x multiple over 10 years, so investors typically look at both together.