In private capital, performance measurement is evolving. Investors and managers are no longer satisfied with surface-level returns. They are looking for a deeper understanding of how value is created, how liquidity is managed and how performance aligns with long-term strategy.
The past few years have highlighted that profitability alone is not enough. Funds now operate in an environment shaped by higher interest rates, stricter regulation, and greater demands for transparency. As a result, performance metrics have become more multi-dimensional, combining financial outcomes with indicators of discipline, risk management and credibility.
Below are five key performance metrics that define fund success in 2025.
1. IRR and MOIC: The Classic Measures, Evolving with Context
The Internal Rate of Return (IRR) and the Multiple of Invested Capital (MOIC) remain the foundation of performance assessment. They show how efficiently a fund turns invested capital into profit and are still the first numbers investors ask about.
However, these figures are no longer interpreted in isolation. In 2025, investors want to understand the composition of those returns. They ask how much value has been realised versus unrealised, whether the results come from operational improvement or financial engineering, and how consistent performance is across the portfolio.
Strong IRR and MOIC remain essential, but their credibility now depends on transparency. Accurate data, realistic assumptions and clearly documented valuation methods matter as much as the numbers themselves.
2. Distributions to NAV: The Liquidity Test
Distributions to Net Asset Value, or D to NAV, has become a crucial indicator of real performance. It measures how much of a fund’s reported value has been distributed to investors.
Recent market cycles have shown that paper gains can be fragile. A high D to NAV demonstrates that a fund is successfully converting asset value into cash, while a low ratio may reveal delayed exits or liquidity strain.
In a period of slower fundraising and longer holding periods, this metric helps investors separate realised success from unrealised potential. It reflects a fund’s ability to manage cash flow effectively, return capital in a timely way and maintain investor trust.
3. Exit Multiples and Time to Exit: Measuring Execution
Exit discipline is another defining feature of high performance in 2025. Achieving strong exit multiples within a reasonable timeframe demonstrates both effective strategy and operational control.
Delays in exit processes can reduce IRR, limit flexibility and expose funds to shifting market conditions. Conversely, early but well-timed exits reinforce credibility and free up capital for reinvestment.
Time to exit also provides insight into the effectiveness of a fund’s value creation strategy. Funds that maintain structured plans at the portfolio company level tend to achieve better multiples faster. Tracking this relationship helps investors see whether value creation efforts are translating into tangible results.
4. Liquidity and Leverage: Gauging Resilience
Leverage remains a defining characteristic of private markets. Yet, as financing costs stay elevated, its impact on fund resilience has become central to performance evaluation.
Metrics such as Debt to EBITDA, Loan to Value and Interest Coverage Ratio are once again key to assessing financial stability. At the same time, the growing use of NAV based credit facilities has introduced new considerations. These facilities can enhance flexibility but also increase risk if not managed carefully.
Investors are now asking how leverage is used, how exposure is controlled and whether liquidity reserves are adequate to weather slower exit markets. In 2025, prudent debt management is no longer a background issue. It is one of the clearest indicators of sound governance.
5. Transparency and Alignment: The Foundation of Trust
Beyond the numbers, transparency has become a defining performance measure. Investors expect clear, timely and consistent reporting. They want to understand how valuations are determined, how key assumptions are stress-tested and how incentive structures align with their own interests.
Funds that communicate with clarity are gaining a competitive edge. High-quality reporting supported by verified data gives investors confidence and helps reduce perceived risk. Likewise, transparent governance around carried interest, co-investment and fee structures signals integrity and accountability.
Performance without transparency is no longer sustainable. Trust has become a metric in itself.
Bringing It All Together
The metrics that matter in 2025 are interconnected. IRR and MOIC reveal profitability. D to NAV measures liquidity discipline. Exit performance reflects execution quality. Leverage metrics capture financial control. Transparency and alignment build trust.
Together, these elements form a complete picture of performance, combining quantitative results with qualitative strength. The most successful funds are those that understand how each dimension supports the other and that communicate this clearly to their investors.
In a changing market, performance is no longer defined only by return percentages. It is measured by consistency, credibility and the ability to turn data into decisions.
Final Notes
As the private capital landscape becomes more competitive, fund performance is being judged on both outcomes and process. Investors are rewarding managers who combine strong returns with operational discipline and transparent reporting.
The challenge for managers is to keep these metrics aligned and measurable in real time. Those who do so will not only outperform in the short term but will also build lasting confidence among investors and stakeholders.
The Untap Perspective
Untap helps funds bring these performance principles to life. Its platform consolidates financial, operational and ESG data into one environment, allowing managers to monitor IRR, MOIC, D to NAV, leverage and value creation metrics with accuracy and clarity.
Through AI powered data collection, scenario analysis and automated reporting, Untap enables teams to reduce manual work, increase transparency and strengthen investor communication.
In a market where measurement defines reputation, Untap supports funds in achieving performance that is both measurable and meaningful.