What does this waterfall calculator model?

It models a simple private capital distribution waterfall with return of capital, preferred return, optional GP catch-up, and a residual LP/GP split.

Does this replace the governing agreement?

No. The calculator is for planning and review. Final distributions should be reconciled to the operating agreement, LPA, side letters, tax allocations, and approval records.

Why does the GP catch-up matter?

A catch-up tier can materially change how profit is shared after the preferred return is paid. Sponsors should show that effect before approving a distribution.

Private capital calculator

Waterfall calculator

Model return of capital, preferred return, GP catch-up, residual profit split, LP proceeds, GP promote, and LP MOIC before a distribution memo becomes final.^1,2

Quick Answer

Use this as the first review pass for sponsor economics. The output should be reconciled to the governing agreement, investor side letters, tax allocations, and the final distribution approval file.^2,3

Inputs

LP contributed capital$Exit or distribution proceeds$Preferred return rate%Holding period in yearsyrsGP promote / carry%

Catch-up structure

Output

LP proceeds

$2,200,000

GP promote

$300,000

LP MOIC

2.20x

GP share of profit

20%

Tier	LP	GP	Control note
Return of capital	$1,000,000	$0	LP capital is returned before profit participation.
Preferred return	$320,000	$0	8% simple annual preferred return over 4.0 years.
GP catch-up	$0	$80,000	GP catch-up brings the promote closer to the negotiated carry share.
Residual split	$880,000	$220,000	Remaining proceeds split 80% to LP / 20% to GP.

This calculator is a planning tool. Final waterfall mechanics should tie back to the governing agreement, side letters, tax allocations, and the distribution approval record.

Tie to source documents

The model should cite the operating agreement, LPA, side letters, contribution ledger, and distribution approval memo.

Preserve exceptions

If a side letter, tax allocation, escrow, clawback, or fee offset changes the output, save the exception record with the calculation.

Connect the glossary

Related definitions should remain one click away so reviewers can validate preferred return, catch-up, promote, and waterfall mechanics.

How to use the result

Treat the output as a review packet, not just a math answer. The LP proceeds, GP promote, preferred return, catch-up, and residual split should be exported into the distribution memo, checked against the capital account ledger, and reviewed against the exact waterfall language in the governing agreement. If the deal has escrows, holdbacks, fee offsets, tax distributions, clawback support, or side-letter economics, those items should be documented as separate adjustments before the final notice goes to investors.^1,3

Related operating graph

Waterfall Preferred return Catch-up Sponsor promote Waterfalls pillar Sponsor economics

Sources & References

1.ILPA Reporting TemplateInstitutional Limited Partners Association(Private fund reporting conventions and investor reporting template context.)primary · industry standard · LP reporting · reporting-standard
2.Private Fund AdvisersU.S. Securities and Exchange Commission(Private fund adviser disclosure, fee, expense, performance, and compliance context.)primary · regulatory context · Compliance · regulatory-source
3.About Form 1065Internal Revenue Service(Partnership tax reporting and Schedule K-1 context for final allocations.)primary · tax authority · Tax and accounting · tax-source