Free Excel Model · Equity Waterfall
4-Tier IRR Pari Passu Waterfall Model
A four-tier equity waterfall where the LPs and GP share cash flow in proportion to their capital, with no catch-up. It is the clearest way to learn how IRR hurdles and promote tiers work.
- 4 IRR tiers
- No catch-up
- Live formulas
What's inside
Model features
- Return of capital first. Contributed equity comes back before any profit is split.
- Preferred return. Tracks the pref as it accrues and gets paid down each period.
- Pari passu splits. LPs and GP share distributions side by side, in proportion to capital.
- Promote tiers. The GP split steps up only on dollars above each IRR hurdle.
- Returns by party. LP and GP IRR, equity multiple and dollars at every tier.
- Editable inputs. Change the hurdles, pref and splits and watch the waterfall rerun.
Learn
How to learn with it
Start with a single hurdle and a flat split, then add tiers one at a time. Each time you change an input, predict what the GP and LP will earn before you look at the answer.
Once it clicks, open the GP catch-up version and run the same deal. Comparing the two is the fastest way to understand why catch-up terms matter.
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