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Distribution Waterfall - Four Examples
Distribution Waterfall - Four Examples
Distribution Waterfall - Four Examples
TRANSACTION
Date
Capital Invested $ (10,000,000) 12/31/2020
Proceeds $ 30,000,000 12/31/2025
EQUITY PARTICIPANTS
GP
Limited Partners
EQUITY PARTICIPATION TERMS
Return of principal to Limited Partners plus an 8% cummulative return on principal.
Then 80 / 20 split between GP / LP.
IRR HURDLES
LP IRR Hurdle
Principal 0.0%
Preferred Return 8.0%
PROCEEDS REQUIRED TO ACHIEVE HURDLES
Proceeds Required
by LP for Hurdle
Principal 10,000,000
Principal + Preferred Return 14,693,281
WATERFALL
IRR Achieved 24.6%
First Distribution:
Limited Partners 14,693,281 100.0%
Second Distribution:
GP 3,061,344 20.0%
Limited Partners 12,245,375 80.0%
GRAND TOTAL PROCEEDS
GP 3,061,344 10.2%
Limited Partners 26,938,656 89.8%
TOTAL 30,000,000
COMMENTS
Second Distribution:
GP 3,673,320 20.0%
Third Distribution:
GP 2,326,680 20.0%
Limited Partners 9,306,719 80.0%
Sub Total 11,633,399
GRAND TOTAL PROCEEDS
GP 6,000,000 20.0%
Limited Partners 24,000,000 80.0%
TOTAL 30,000,000
COMMENTS
*20% Catch Up
Second Distribution:
GP 1,173,320 20.0%
Third Distribution:
GP 2,826,680 20.0%
Limited Partners 11,306,719 80.0%
Sub Total 14,133,399
GRAND TOTAL PROCEEDS
GP 4,000,000 13.3%
Limited Partners 26,000,000 86.7%
TOTAL 30,000,000
nd Pref. Followed by 80/20 Split
COMMENTS
ps 2 and 3.
*20% Catch Up
WATERFALL
IRR Achieved 24.6% IRR Hurdle 6
First Distribution:
Management Team 1,759,814 6.0%
Sponsor Promote 4,692,836 16.0%
Limited Partners 22,877,578 78.0%
Sub Total 29,330,228
Second Distribution:
Management Team 40,186 6.0%
Sponsor Promote 107,164 16.0%
Limited Partners 522,422 78.0%
Sub Total 669,772
GRAND TOTAL PROCEEDS
Management Team 1,800,000 6.0%
Sponsor Promote 4,800,000 16.0%
Limited Partners 23,400,000 78.0%
TOTAL 30,000,000
eal by Deal
COMMENTS
TOTAL
0%
10%
13%
18%
20%
22%
25%
28%