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  • European Waterfall (standard and more common)
  • American Waterfall
  • GP Commit Treatment
  1. Portfolio Construction
  2. Construction Wizard

Waterfall

Define the profit splits between LP’s and GP’s. Tactyc supports both the American (deal by deal carry) and European (fund level carry) provisions.

PreviousExit RecyclingNextLimited Partners

Last updated 1 year ago

European Waterfall (standard and more common)

The European Waterfall follows this naming terminology:

  • Distributable Proceeds is the amount of proceeds that distributable to all Limited Partners

  • Tier 1: Initial Investment Return to all Limited Partners until they have been returned their initial investment. This is fixed to 100%.

  • Tier 2 (optional): Preferred Return to Limited Partners from remaining proceeds to achieve a specified IRR or multiple hurdle rate

  • Tier 3 (optional): GP Catch-up to General Partners from remaining proceeds to achieve a level commensurate with their profit interest (typically 20%)

  • Tier 4: GP Carried Interest to General Partners from remaining proceeds based on a carried interest (%)

  • Remaining proceeds all flow to Limited Partners

American Waterfall

The American Waterfall follows this naming terminology:

  • Distributable Proceeds is the amount of proceeds that distributable to all Limited Partners

  • Tier 1: Initial Investment Return to Limited Partners from LP attributable proceeds. This is fixed to 100%.

  • Tier 2: GP Carried Interest to General Partners from remaining proceeds based on a carried interest (%)

  • Remaining proceeds all flow to Limited Partners

  • Optional Clawback: If the fund has a clawback provision that lets GP claw into past distributions to LP’s check this option and set the hurdle rate at which GP’s can start clawing back.

GP Commit Treatment

  • If the fund has a GP Commit, these GPs are treated as LPs for the purpose of the waterfall i.e. the GPs will recoup their committed capital along with the LPs and also participate in any preferred returns and LP profits commensurate with the GP Commitment %. These profits to GP (as an LP) are referred to as GP Proceeds in the fund's waterfall in Tactyc.