4-Tier IRR Pari Passu Waterfall Model
A four-tier equity waterfall in which the limited partner and general partner share distributions pari passu, in proportion to committed capital. There is no GP catch-up tier, so the general partner earns promote only on dollars above each hurdle rather than on total profit.
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.
- Pari passu distributions. LP and GP receive distributions side by side in proportion to capital contributed.
- No GP catch-up. Promote is earned only on dollars above the hurdle, not retroactively on the full profit pool.
- Promote tiers above the hurdle. 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, and promote splits are all inputs.
How this differs from the GP catch-up version
This model has no catch-up tier, so the general partner earns promote only on dollars above each hurdle. In a catch-up structure the general partner instead receives a disproportionate share of distributions after the preferred return is paid, until it has reached its full negotiated share of total profit, which produces a materially larger promote on the same deal.
If your structure includes a catch-up tier, use the 4-Tier IRR GP Catch-Up Waterfall instead.