Search Fund Jargon Translator
Clear, plain-English definitions of ETA and dealmaking terms, with practical notes and examples.
Multiple on Invested Capital (MOIC)
A metric that measures the total value returned to an investor relative to the amount of capital they invested. It does not account for the time value of money.
Internal Rate of Return (IRR)
The annualized rate of return that makes the net present value (NPV) of all cash flows (both positive and negative) from a particular investment equal to zero.
Distribution Waterfall
A method for distributing investment returns among partners in a fund, where cash flows are allocated to different tiers of stakeholders in a specific order of priority.
Promote
The share of profits that the general partners or fund managers (the searcher) receive as compensation, regardless of whether they contributed any initial capital. It is a performance-based fee.