What's the difference between DPI and TVPI?
A core Private Equity interview question — asked in analyst and associate interviews across IB, PE, and the Big 4.
THE SHORT ANSWER
DPI (Distributed to Paid-In) = cash distributed / capital paid in. This is 'cash-on-cash' — real money returned. TVPI (Total Value to Paid-In) = (distributions + remaining NAV) / capital paid in. TVPI includes unrealized gains, which depend on GP's valuation marks. Sophisticated LPs focus on DPI because NAV can be optimistic. 'DPI is a fact. TVPI is an opinion.'
WHAT INTERVIEWERS LISTEN FOR
- ✓DPI measures actual cash returned relative to capital contributed
- ✓TVPI includes unrealized value and is subject to valuation assumptions
- ✓LPs often prioritize DPI over TVPI for assessing realized performance
COMMON MISTAKES
- ✗Confusing DPI with TVPI or using them interchangeably
- ✗Over-relying on TVPI without considering NAV reliability
- ✗Ignoring the time value of money in these metrics
Reading isn't the same as answering under pressure.
Interviewers don't hand you the model answer — you deliver yours on a clock. Practice this and 1,000+ questions with AI feedback on every answer.
RELATED QUESTIONS