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    Calculates locally in your browser · European-style waterfall
    Private markets / Distributions

    Distribution waterfall

    Where the money goes: capital back, then the preferred return, then the GP catch-up, then the 80/20 split. Change the carry or the preference and see exactly who gets what — the arithmetic behind a fund’s distribution notice.

    Paid-in$100.00MDistributed$200.00MSplit90 / 10
    LP total
    $180.00M
    90.0% of distributions
    GP total
    $20.00M
    carry 20%
    Preference
    $8.00M
    8% on paid-in
    Catch-up to GP
    $2.00M
    100% catch-up
    Waterfall
    Return of capital, preference, catch-up, then the split.
    Waterfall
    TierTo LPTo GP
    Return of capital$100.00M—
    Preferred return$8.00M—
    GP catch-up—$2.00M
    Residual split$72.00M$18.00M
    Total$180.00M$20.00M

    Simple (non-compounding) preferred return on paid-in capital.

    Inspect the model
    Choose a quick result view, a scaled comparison, or the complete diagnostic set.
    GP share against carried interest
    At a 20% carry with a full catch-up, the GP reaches 20% of profit.
    GP share against carried interest0.0007.0814.1621.2428.3235.400.0000%0%10.0010%10%15.0015%15%20.0020%20%25.0025%25%30.0030%30%GP $M
    Canonical equations
    The exact relationships implemented by this engine.

    pref = paid-in × preferred rate · Simple, non-compounding.

    GP catch-up = pref × c/(1 − c) · Brings the GP to its carry share.

    carry × remaining · After the catch-up.

    finance methodology

    A clear path from inputs to results.

    A waterfall is the order in which a fund pays out: capital first, then the preferred return, then the GP catch-up, then the split. The catch-up is the part people get wrong, and it is worth a fifth of the profit.

    Step-by-step methodWorked exampleAssumptions explained

    How to use

    1. Enter the distributable proceeds and the paid-in capital.
    2. Set the preferred return, the catch-up percentage and the carry.
    3. Read the split tier by tier and who ends up with what.

    The formula

    catch-up=pref×c1−c\text{catch-up} = \text{pref} \times \frac{c}{1 - c}

    Reference: European (whole-fund) waterfall with a simple non-compounding preference, following the ILPA waterfall and reporting standards.

    Worked example

    $200M out on $100M paid-in

    Inputs
    • 8% preference, 100% catch-up, 20% carry.
    Calculation path
    1. 1

      Capital $100M, preference $8M, catch-up $2M (to bring the GP to 20% of the $10M profit), then 20% of the remaining $90M = $18M.

    Result

    LP $180M, GP $20M — exactly 20% of the profit.

    Interpreting the result

    With a full catch-up the GP ends up with carry times the profit, regardless of how the tiers are ordered. Without a catch-up the GP only shares in the profit above the preference.

    Assumptions & limitations

    • Whole-fund, not deal-by-deal.
    • Simple preference on paid-in capital.
    • No management fee offset.
    • No clawback.

    Frequently asked questions

    Why does the catch-up exist?

    Without it the GP would receive nothing until LPs had their preference plus a share of everything above it.

    Is a European waterfall better for LPs?

    Generally yes, because the preference is measured across the whole fund rather than per deal.

    What does 100% catch-up mean?

    The GP takes all distributions until it holds its carry share of the profit so far.

    What is a clawback?

    An obligation to return carry if later losses mean the GP was overpaid — not modelled here.

    Methodology last reviewed 2026-10-22. Results are informational and not financial or engineering advice — see our disclaimer.