Definition
Equity multiple is total cash distributions divided by initial investment. A 1.5x multiple means $1.50 returned per dollar invested.
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Find my pathAbout this term
Equity multiple of 1.5x means $1.50 returned per $1 invested. Total return metric including all distributions. Example: $100,000 invested returns $150,000 total = 1.5x multiple. Timeframe matters (1.5x in 5 years is better than 10 years). Does not account for timing. Often used with IRR for complete picture. 1.2-1.5x typical for conservative deals. 1.5-2.0x+ for aggressive deals. Key investor metric. Comparable across different scenarios. Combined with IRR provides complete return picture.
Pro Tip
Equity multiple alone doesn't account for time. Combine with IRR.
Example
Investment generated 1.6x equity multiple on capital deployed over 7-year hold.