Realization Multiple


DEFINITION of 'Realization Multiple'

A private equity measurement that values the return paid to an investor. The multiple is named after the amount of return that is realized. The realization multiple is found by dividing the cumulative distributions from a project by the paid-in capital.

Realization Multiple

BREAKING DOWN 'Realization Multiple'

This method of valuing a project is often used by venture capitalists, and provides a return which can be compared across investment projects. The time value of money is ignored under this approach, which differentiates the realization multiple from other valuation methods, such as internal rate of return or net present value.

  1. Internal Rate Of Return - IRR

    A metric used in capital budgeting measuring the profitability ...
  2. Net Present Value - NPV

    Net Present Value (NPV) is the difference between the present ...
  3. Venture Capital

    Money provided by investors to startup firms and small businesses ...
  4. Private Equity

    Private Equity is equity capital that is not quoted on a public ...
  5. Paid In Capital

    The amount of capital "paid in" by investors during common or ...
  6. Time Value of Money - TVM

    The idea that money available at the present time is worth more ...
Related Articles
  1. Credit & Loans

    How Mortgage Refinancing Affects Your Net Worth

    Find out how to determine whether refinancing will put you ahead or even more behind.
  2. Mutual Funds & ETFs

    How To Invest In Private Equity

    Private Equity might be a pricey investment, but returns are on the rise and the payoff could be big.
  3. Bonds & Fixed Income

    Equity Premiums: Looking Back And Looking Ahead

    If stocks become less profitable in the future, you may have to change your investment strategy.
  4. Retirement

    IPO Basics Tutorial

    What's an IPO, and how did everybody get so rich off them during the dotcom boom? We give you the scoop.
  5. Markets

    The Biggest Private Equity Firms In India

    Learn about the leading private equity firms operating in India and which companies and industries are attracting foreign investment dollars.
  6. Financial Advisors

    Are Alternatives Right for Your Portfolio?

    Alternative investments are increasingly making their way into retail investors' portfolios. Are they a good fit?
  7. Fundamental Analysis

    Top Private Equity Bargains for Your Portfolio

    Investing in private equity firms can lead to long-term profits.
  8. Entrepreneurship

    The Top 4 Social Venture Capital Firms

    Learn how social venture capitalists are investing in companies more focused on making the world a better place to live than returns on investments.
  9. Stock Analysis

    Toys 'R' Us Stock Doesn’t Exist: Here is Why

    Learn why investors cannot trade stock in toy retailer Toys 'R' Us. This privately traded company could be a hot IPO candidate for the future.
  10. Markets

    Dell Stock Doesn’t Exist. Here is Why

    Learn why Michael Dell took his namesake company private after being publicly traded for 25 years. Discover why going private is helpful for the company.
  1. Do hedge funds invest in private companies?

    Hedge funds normally do not invest in private companies because of liquidity concerns. Capital funding for private companies ... Read Full Answer >>
  2. Who do hedge funds lend money to?

    Many traditional lenders and banks are failing to provide loans. In their absence, hedge funds have begun to fill the gap. ... Read Full Answer >>
  3. Can mutual funds invest in private equity?

    Mutual funds can invest in private equity indirectly by buying shares of publicly listed private equity companies, such as ... Read Full Answer >>
  4. How do you find the break-even point using a payback period?

    It does not make sense to find the breakeven point using a company's payback period. A company's payback period is concerned ... Read Full Answer >>
  5. What does residual value represent in a private equity investment?

    It is common to see a private equity investment's net asset value, or NAV, referred to as its residual value, since it represents ... Read Full Answer >>
  6. What is considered a reasonable interest rate for a syndicated loan?

    A 2010 survey of syndicated loans found an average interest rate of 7.9%. However, the majority of syndicated loans are floating ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Bar Chart

    A style of chart used by some technical analysts, on which, as illustrated below, the top of the vertical line indicates ...
  2. Bullish Engulfing Pattern

    A chart pattern that forms when a small black candlestick is followed by a large white candlestick that completely eclipses ...
  3. Cyber Monday

    An expression used in online retailing to describe the Monday following U.S. Thanksgiving weekend. Cyber Monday is generally ...
  4. Take A Bath

    A slang term referring to the situation of an investor who has experienced a large loss from an investment or speculative ...
  5. Black Friday

    1. A day of stock market catastrophe. Originally, September 24, 1869, was deemed Black Friday. The crash was sparked by gold ...
Trading Center