Free Excel Model · Equity Waterfall
4-Tier IRR Waterfall with GP Catch-Up Model
A four-tier equity waterfall built on IRR hurdles, with a GP catch-up after the preferred return. Use it to see exactly how a catch-up shifts profit from the LPs to the GP, tier by tier.
- 4 IRR tiers
- GP catch-up
- Live formulas
What's inside
Model features
- Return of capital first. LP and GP equity comes back before any profit is split.
- Preferred return. Tracks the pref as it accrues and gets paid down each period.
- GP catch-up. After the pref, the GP receives a larger share until it reaches its full negotiated share of profit.
- Promote tiers. The GP split steps up as the LPs clear each IRR hurdle.
- Returns by party. LP and GP IRR, equity multiple and dollars at every tier.
- Editable inputs. Change the hurdles, pref, catch-up and splits and watch the waterfall rerun.
Learn
What the catch-up does
Without a catch-up, the GP only earns its promote on dollars above each hurdle. With one, the GP gets a bigger slice right after the pref is paid, until it has caught up to its full share of total profit.
Run the same cash flows through this model and the pari passu version. The gap in GP dollars is the value of the catch-up, and it is one of the most common terms negotiated in a JV.
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