4-Tier IRR GP Catch-Up Waterfall Model
A four-tier equity waterfall built around IRR hurdles, with a full GP catch-up tier. It distributes operating cash flow and capital events between the limited partner and general partner, and reports what each party earns at every level of deal performance.
Model Features
- Four IRR-based distribution tiers. Each tier triggers once the limited partner clears a defined IRR hurdle.
- Return of capital. Contributed equity is returned before any profit is split.
- Preferred return accrual. Tracks the preferred return as it accrues and is paid down.
- GP catch-up tier. Brings the general partner up to its full negotiated share of profit once the preferred return is satisfied.
- Tiered promote splits. Promote percentages step up as the deal clears successive hurdles.
- Per-tier return reporting. LP and GP IRR and equity multiple shown at each tier.
- Editable assumptions. Hurdle rates, preferred return, catch-up percentage, and promote splits are all inputs.
How this differs from the pari passu version
The catch-up tier is the difference. With a catch-up, the general partner receives a disproportionate share of distributions once the preferred return is satisfied, until it has reached its full negotiated share of total profit. Without one, the general partner earns promote only on dollars above each hurdle, which leaves more of the profit with the limited partner.
If your structure has no catch-up tier, use the 4-Tier IRR Pari Passu Waterfall instead.