The Equity Multiple is Nice, But the Velocity of Money Counts

[Rick Martin]

Do you look at an equity multiple of 2x being better than a multiple of 1.6x?

The answer is, it depends on the hold time. Remember the velocity of money!

If you take that money from the 1.6x and redeploy it into another investment after year 4, you come out better than the straight 2x because you are taking a larger sum in yr-4 and putting it back to work (assuming the annual return is as good or better).

See the example below 👇. Account for every metric, including time, when investing. Do you generally look for the highest equity multiple?