Unravel the complexities of private equity waterfall distributions with our free online calculator. Accurately model GP and LP profit splits, accounting for preferred returns, catch-up clauses, and carried interest across multiple tiers. Simplify your PE fund distribution calculations and understand your equity payouts.
Formula:
A Private Equity Waterfall Distribution typically follows a tiered structure for profit distribution. Our calculator models a common European-style waterfall with these stages:
- Tier 1: Return of Capital: 100% of proceeds to Limited Partners (LPs) until their initial capital contribution is fully returned.
- Tier 2: LP Preferred Return: 100% of subsequent proceeds to LPs until they receive their preferred return on capital (e.g., 8% annualized).
- Tier 3: GP Catch-up: 100% of subsequent proceeds to the General Partner (GP) until the GP's total profit share equals their full carried interest percentage of the *total profit distributed to both LP and GP so far*.
- Tier 4: Carried Interest Split: Remaining proceeds are split between LPs and GP according to the agreed-upon carried interest percentage (e.g., 80% LP, 20% GP).
Variables used:
- CLP: Initial LP Capital Contribution
- PTotal: Total Project Proceeds
- RPref: LP Preferred Return Rate (%)
- Y: Investment Duration (Years)
- RCarried: GP Carried Interest Rate (%)