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Carried interest waterfall calculator
Enter paid-in capital, total distributions, the hurdle rate, the average holding years, the carry rate and whether the GP has a full catch-up. The calculator runs a whole-fund (European) waterfall and returns the GP carry and the LP total.
Fund and deal returns
GP carried interest
$16,000,000
- Total to LPs
- $164,000,000
- LP multiple on paid-in capital
- 1.64x
- Preferred return paid
- $46,932,808
- GP share of total profit
- 20%
Planning estimate from the figures you enter. Not investment, tax or legal advice.
How it is calculated
- Step 1: LPs get their paid-in capital back.
- Step 2: LPs get the preferred return, compounded at the hurdle over the average years.
- Step 3 (catch-up): the GP takes 100% of the next dollars until it holds the carry rate of all profit so far.
- Step 4: the rest is split carry rate to the GP and the remainder to LPs.
Worked example: $180 million back on $100 million paid in
| Return of capital | $100,000,000 |
| Preferred return (8% over 5 years) | $46,932,808 |
| GP catch-up | $11,733,202 |
| 80/20 split of the rest | $17,067,192 LP / $4,266,798 GP |
| GP carry in total | $16,000,000 (20% of profit) |
| LP multiple | 1.64x |
Whole fund or deal by deal
A European (whole-fund) waterfall pays carry only after LPs have their capital and preferred return back across the fund. An American (deal-by-deal) waterfall can pay carry on early winners, usually with a clawback if later deals lose money. This calculator models the whole-fund version.
What LPs read
The waterfall in the LPA is one of the most read documents in a fund raise. Add a worked example to the data room, with the same numbers as the PPM summary, and point the DDQ answer to it.
If the hurdle compounds, says so clearly; if the catch-up is partial (for example 80% to the GP), model it separately.
Simplifications here
Real waterfalls run on dated cash flows, not an average holding period, and often treat fees and expenses as part of the capital returned. Use this for planning and for checking the order of magnitude, not for a distribution notice.
Mistakes to avoid
- Mixing up the hurdle on paid-in and on committed capital.
- Leaving the catch-up out of the PPM summary.
- Showing a waterfall example in the deck that differs from the LPA.
- Ignoring clawback terms on a deal-by-deal structure.
Questions and answers
What is a GP catch-up?
After LPs receive the preferred return, the GP receives a larger share (often 100%) of the next distributions until it has caught up to its carry rate on all profit.
Is an 8% hurdle standard?
An 8% preferred return is common in private equity and real estate funds, but many venture funds have no hurdle. Your LPA sets it.
Where does carry get taxed?
Tax treatment of carried interest depends on holding periods and current law, which changes. Ask fund counsel and a tax adviser; the calculator does not model tax.