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
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Input: Fund terms, realized/unrealized values Process: Apply waterfall mechanics Output: Distribution allocation, carry calculation
Model Distribution Scenario
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Input: Exit scenario, fund status Process: Calculate pro forma distributions Output: LP/GP split, carry amount
Calculate Clawback Exposure
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Input: Fund history, projected outcomes Process: Model potential clawback Output: Clawback exposure, escrow adequacy
Project Final Settlement
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Input: Portfolio status, exit projections Process: Model fund conclusion scenarios Output: Projected final distributions
Waterfall 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