Connect the return target to the scale of the exit.
A return target is more concrete when translated into the company exit value required to achieve it. A smaller final ownership stake requires a larger company outcome for the same proceeds.
Use ownership at exit, after future financing and equity issuance. The model assumes proportional distributions and therefore does not capture liquidation preferences or transaction-specific allocations.
The formula, made clear.
- Target MOIC
- Total gross proceeds divided by total invested capital; independent of time.
- Exit ownership
- The investor’s final stake when proceeds are distributed.
- Fund contribution
- Gross proceeds from this one company divided by the entered fund size; excludes fees, carry and other investments.
Put the numbers in context.
$1,000,000.00 invested at a 10× target requires $10,000,000.00 proceeds. A 5% exit stake needs $200,000,000.00 in distributable equity value.
| Input | Example value |
|---|---|
| Total invested capital | $1,000,000.00 |
| Target gross investment multiple | 10 × |
| Expected ownership at exit | 5% |
| Fund size for contribution comparison | $50,000,000.00 |
| Target gross fund contribution | 1 × |
| Required exit equity value | $200,000,000.00 |
What this calculation assumes
Pro-rata equity distributions, no preferences, tax, fees or residual value. All target proceeds arrive at the modeled exit; multiple does not specify holding period or IRR.
What to consider next.
Compare the implied equity value with plausible revenue and earnings outcomes. Use the enterprise-to-equity bridge before applying an enterprise-value exit multiple.
How we approach financial models →