Waterfall Calculator
Overview
The Waterfall Calculator skill calculates distribution waterfalls according to Limited Partnership Agreement (LPA) terms. It models carried interest, clawback provisions, and LP/GP distributions across various waterfall structures common in venture capital.
Capabilities
Waterfall Structure Modeling
- Support American (deal-by-deal) waterfalls
- Support European (whole-fund) waterfalls
- Handle hybrid waterfall structures
- Model fund-of-funds structures
Carried Interest Calculation
- Calculate GP carry based on LPA terms
- Model catch-up provisions
- Handle tiered carry structures
- Track crystallized vs. unrealized carry
Clawback Modeling
- Calculate potential clawback obligations
- Model true-up scenarios
- Track escrow requirements
- Project final settlement amounts
Distribution Modeling
- Calculate LP and GP distributions
- Model management fee offsets
- Handle recycling provisions
- Track return of capital vs. profits
Usage
Calculate Waterfall
Input: Fund terms, realized/unrealized values
Process: Apply waterfall mechanics
Output: Distribution allocation, carry calculationModel Distribution Scenario
Input: Exit scenario, fund status
Process: Calculate pro forma distributions
Output: LP/GP split, carry amountCalculate Clawback Exposure
Input: Fund history, projected outcomes
Process: Model potential clawback
Output: Clawback exposure, escrow adequacyProject Final Settlement
Input: Portfolio status, exit projections
Process: Model fund conclusion scenarios
Output: Projected final distributionsWaterfall Components
| Component | Description | |-----------|-------------| | Return of Capital | LPs receive contributed capital first | | Preferred Return | LPs receive hurdle (typically 8%) | | GP Catch-up | GP catches up to carry percentage | | Carried Interest | 80/20 split (typically) on remaining |
Integration Points
- Distribution Waterfall Calculation Process: Core skill
- Cap Table Modeler (Agent): Connect to ownership data
- K1 Generator: Feed into tax reporting
- Fund Accountant (Agent): Support accounting work
Waterfall Types
| Type | Carry Calculation Basis | |------|-------------------------| | American | Deal-by-deal, immediate carry | | European | Whole fund, after capital return | | Hybrid | Combination with clawback |
Best Practices
- Model precisely per LPA terms
- Track management fee offsets
- Maintain accurate capital account balances
- Model clawback sensitivity
- Reconcile with fund administrator