Multiple on Invested Capital (MOIC)

A measure of how much capital is required to generate a unit of revenue, calculated as total assets divided by total revenue. Companies with high intangible asset bases may report misleadingly low capital intensity because many intangible investments are expensed rather than capitalised on the balance sheet.

A measure of how effectively a company allocates capital to generate returns, calculated as net operating profit after tax divided by invested capital. ROIC above the cost of capital indicates value creation; below it signals value destruction.

A valuation ratio comparing a company's enterprise value to its EBITDA. EV/EBITDA is one of the most commonly used multiples for comparing valuations across companies, controlling for differences in capital structure, taxation, and depreciation policies.

A metric that measures the financial return generated per unit of human capital expenditure, typically calculated as adjusted profit divided by total compensation and benefits costs. HCROI enables firms and investors to evaluate workforce productivity and benchmark the efficiency of human capital deployment across organisations.

A valuation ratio comparing a company's enterprise value to its annual revenue. EV/Revenue is often used to value high-growth or pre-profit companies where earnings-based multiples are not meaningful.

The cumulative amount of committed capital that a general partner has drawn down from limited partners through capital calls to fund investments, management fees, and fund expenses. Called capital represents the actual cash invested by LPs and is used to calculate performance metrics including DPI and TVPI.

The total amount of money that limited partners have pledged to invest in a fund over its lifetime. Not all committed capital is drawn down immediately; general partners issue capital calls as investment opportunities arise.

A private equity and venture capital performance metric measuring the ratio of cumulative cash distributions returned to investors relative to the capital they have contributed. A DPI of 1.0x means investors have received back their original investment.

The AI Valuation Premium: How AI Capability Affects Company Value

AI-enabled companies trade at 25-40% higher multiples than peers, but not all AI capability is created equal. This article examines what drives the AI valuation premium, how to assess whether it is justified, and what happens when the premium unravels.

How do intangible assets interact with valuation multiples?

Companies with strong intangible assets (brands, IP, data moats) tend to command higher valuation multiples than commodity businesses, because buyers pay more for durable, defensible earnings.

How do intangible assets affect company valuation multiples?

Companies with strong intangible assets command higher EV/Revenue and EV/EBITDA multiples because intangibles drive sustainable margins, competitive moats, and scalable growth.

What is a multiple (EV/Revenue, EV/EBITDA) and how do I choose the right one?

Multiples are shortcuts: Enterprise Value / Revenue (EV/Revenue) for growth-stage, EV/EBITDA for profitable companies, EV/Users for early-stage. Choose based on whether your business is profitable.