waterfall-calculator

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 calculation

Model Distribution Scenario

Input: Exit scenario, fund status
Process: Calculate pro forma distributions
Output: LP/GP split, carry amount

Calculate Clawback Exposure

Input: Fund history, projected outcomes
Process: Model potential clawback
Output: Clawback exposure, escrow adequacy

Project Final Settlement

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

1. Model precisely per LPA terms
2. Track management fee offsets
3. Maintain accurate capital account balances
4. Model clawback sensitivity
5. Reconcile with fund administrator